NORTH CAROLINA
REGISTER
VOLUME 13 • ISSUE 8 • Pages 621 - 752
October 15, 1998
IN THIS ISSUE
Administration
Certified Public Accountant Examiners
Commerce
Environment and Natural Resources
Health and Human Services
Insurance
Labor
Medical Board
Nursing. Board of
Revenue
Transportation
Rules Review Commission
Contested Case Decisions
PUBLISHED BY
The Office of Administrative Hearings
Rules Division
PO Drawer 27447
Raleigh, NC 27611-7447
Telephone (919) 733-2678
Fax (919) 733-3462
RECEIVED
OCT 2 1 1998
KATHRINE R. EVERETT
LAW LIBRARY
This publication is printed on permanent, acid-free paper in compliance with G.S. 125-11. 13
For those persons that have questions or concerns regarding the Administrative Procedure Act or any of its
components, consult with the agencies below. The bolded headings are typical issues which the givev,
agency can address, but are not inclusive.
Rule Notices, Filings, Register, Deadlines, Copies of Proposed Rules, etc.
Office of Administrative Hearings
Rules Division
Capehart-Croci^er House (919) 733-2678
424 North Blount Street (919) 733-3462 FAX
Raleigh, North Carolina 27601-2817
contact: Molly Masich, Director APA Services
Ruby Creech, Publications Coordinator
mmasich@oah.state.nc.us
rcreech@oah .state.nc. us
Fiscal Notes & Economic Analysis
Office of State Budget and Management
1 1 6 West Jones Street
Raleigh, North Carolina 27603-8005
contact: Mark Sisak, Economist ill
(919)733-7061
(919) 733-0640 FAX
msisak(rt)osbm.state.nc.us
Rule Review and Legal Issues
Rules Review Commission
1307 Glenwood Ave., Suite 159
Raleigh, North Carolina 27605
contact: Joe DeLuca Jr., Staff Director Counsel
Bobby Br>'an, Staff Attorney
(919)733-2721
(919) 733-9415 FAX
Legislative Process Concerning Rule-making
Joint Legislative Administrative Procedure Oversight Committee
545 Legislative Office Building
300 North Salisbury Street (919) 733-2578
Raleigh, North Carolina 27611 (919) 715-5460 FAX
contact: Mary Shuping, Staff Liaison
marys@ms.ncga.state.nc.us
County and Municipality^ Government Questions or Notification
NC Association of Count>' Commissioners
2 1 5 North Dawson Street (9 1 9) 7 1 5-2893
Raleigh, North Carolina 27603
contact: Jim Blackburn or Rebecca Troutman
NC League of Municipalities
2 1 5 North Dawson Street
Raleigh, North Carolina 27603
contact: Paula Thomas
(919)715-4000
This publication is printed on permanent, acid-free paper in compliance with G.S. 125- 1 1. 13
NORTH CAROLINA
REGISTER
I
>
Volume 13, Issue 8
Pages 621 - 752
October 15, 1998
This issue contains documents officially filed
through September 24. 1998.
Office of Administrative Hearings
Rules Division
424 North Blount Street (27601 )
PO Drawer 27447
Raleigh. NC 2761 1-7447
(919)733-2678
FAX (919) 733-3462
Julian Mann III. Director
Camille Winston. Deputy Director
Molly Masich, Director of APA Services
Ruby Creech. Publications Coordinator
Jean Shirley. Editorial Assistant
Linda Dupree. Editorial Assistant
Jessica Flowers. Editorial Assistant
IN THIS ISSUE
I. RULE-MAKING AGENDA
Environment and Natural Resources
Environmental Management 621 - 624
Health Services. Commission for 621 - 624
II. RULE-MAKING PROCEEDINGS
Environment and Natural Resources
Wildlife Resources Commission 625 - 626
Transportation
Highways, Division of 626
III. PROPOSED RULES
Administration
Environmental Policy Act 642 - 645
Indian Affairs . . . .' 640-642
Purchase and Contract 627 - 640
State Building Commission 645 - 647
State Emplovees Combined Campaign 647 - 652
Commerce
Finance Center 652 - 668
En\ ironment and Natural Resources
Soil and Water Conservation Commission 688 - 690
Health and Human Ser\ ices
Medical Assistance 668 - 673
Insurance
Life and Health Division 673 - 676
Labor
Boiler and Pressure Vessel 685 - 686
Retaliatory Employment Discrimination 686 - 688
Wage and Hour 676-685
Licensing Boards
Certified Public Accountant Examiners 696 - 709
Medical Board 709-725
Nursing. Board of 725 - 732
Revenue
Individual Income Tax Division 694 - 695
License and Excise Tax Division 690 - 694
Motor Fuels Tax Division 695 - 696
Sales and Use Tax 695
IV. TEMPORARY RULES
Environment and Natural Resources
Marine Fisheries Commission 739 - 740
Health and Human Services
Medical Assistance 733 - 739
V. RULES REVIEW COMMISSION 741-746
VI. CONTESTED CASE DECISIONS
Index to ALJ Decisions 747 - 752
VII. CUMULATIVE INDEX 1-73
\orili Carolina Kegisler is puhlishtd semi-monthh lor $1V5 per \ear b\ the ortlcc nl \clniinislrati\e Hearings. 424 North Blount Street. Raleigh. NL
27601 (ISSN L>2(I(IW)4) to mail at Penodieals Rates is paid at Raleigh. NC POSTMASTER: Send Address changes to the Xorili Carolina Regisier.
P(J Drawer 27447. Raleidi. NC 2761 1-7447
NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM
The Xorih Carolina Administrative Code (NCAC) lias four major subdivisions of rules. Two of these, titles and chapters,
arc mandatory. The major subdivision of the ,\C.4C is the title. Each major department in the North Carolina executive
branch of government has been assigned a title number. Titles are jiirther broken down into chapters which shall be
numerical in order. The other nvo. subchapters and sections are optional subdivisions to be used by agencies when
appropriate.
TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE
TITLE
DEPARTMENT
LICENSING BOARDS
CHAPTER
1
Adiiiinislralioii
Acupuncture
1
-)
Agriculture
Architecture
1
3
Auditor
Athletic Trainer Examiners
3
4
Commerce
Auctioneers
4
5
Correction
Barber Examiners
6
6
Council of State
Certified Public Accountant Examiners
8
7
Cultural Resources
Chiropractic Examiners
10
8
Elections
Employee Assistance Professionals
11
9
(jo\ernor
General Contractors
12
U)
Health and Human Ser\ices
Cosmetic Art Examiners
14
11
Insurance
Dental Examiners
16
12
Justice
Dietetics/Nutrition
17
13
Labor
Electrical Contractors
18
14A
Crime Control & Public Satet\
Electrol>sis
19
15A
En\ ironment and Natural
Foresters
20
Resources
Geologists
21
16
Public Education
Hearing Aid Dealers and Fitters
-)-)
17
Re\enue
Landscape Architects
26
18
Secretar\ of State
Landscape Contractors
28
19A
Transportation
Marital and Famil_\ Therapy
31
20
Treasurer
Medical Examiners
32
*21
Occupational Licensing Boards
MidwifePi Joint Committee
33
")">
Administrative Procedures
Mortuary Science
34
23
CommunitN Colleges
Nursing
36
24
Independent Agencies
Nursing Home Administrators
37
25
State Personnel
Occupational Therapists
38
26
Administrati\e Hearings
Opticians
40
27
NC State Bar
Optometp.
42
Osteopathic Examination & Reg. (Repealed)
44
Pastoral Counselors. Fee-Based Practicing
45
Pharmacx
46
Phvsical Therap\ Examiners
48
Plumbing. Heating & Fire Sprinkler Contractors
50
Podiatry Examiners
52
Professional Counselors
53
Psychology Board
54
Professional Engineers & Land Sur\ e\ors
56
Real Estate Appraisal Board
57
Real Estate Commission
58
Refrigeration Examiners
60
Sanitarian Examiners
62
Social Work Certification
63
Soil Scientists
69
Speech & Language Pathologists & Audiologists
64
Substance Abuse Professionals
68
Therapeutic Recreation Certification
65
Veterinar\ Medical Board
66
Note: Title 2 1 contains the chapters of the various occupational licensing boards.
H
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RULE-MAKING AGENDA
An agency may choose to publish a rule-making agenda which serves as a notice of rule-making proceedings if the agenda
includes the information required in a notice of rule-making proceedings. The agency must accept comments on the agenda for
a! least 60 days from the publication date. Statutory reference: G.S. 1 50B-2I .2.
TITLE 15A - DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
This agenda will serve as the notice of rule-makitig proceedings for the following rule-making bodies from October 15. 1998 through
December 15. 1998:
Environmental Management Commission - to rules codified in 15.4 NCAC 2B. 2D, 2H. & 2Q;
Commission for Health Sen-ices - to rules codified in ISA NCAC 18A.
AIR QUALITY
APA #
E2681
E2682
E2683
E2684
E2685
SUBJECT
Pennit Content
New Source Performance Standards
Activities Exempt from Permit Requirements
Activities Exempted from Pemiit Requirements
Concrete Batcii Plants
RULE CITATION #
ISA NCAC 2Q .0508
ISA NCAC 2D .0524
ISA NCAC 20 .01 02
ISA NCAC 20 .0102
ISA NCAC 2D .0541 (New Rule)
WATER QUALITY
APA# SUBJECT
E2697
1997-1998 Triennial Surface Water Quality
Standards Review
RULE CITATION P
ISA NCAC 2B .0100 and .0200
WATER QUALITY LABORATORY SERVICES
APA # SUBJECT
E2655 Laboratorv Certification
RULE CITATION #
ISA NCAC 2H .0800
APA #; E2655
SUBJECT: Lrboratorv' Certification
RULE CITATION #: I'SA NCAC 2H .0800
STATUTORY AUTHORITY: G.S. 143-2 1 S.3(a)( 1 ); 143-215.3(aK10)
DIVISION SECTION: WATER QUALITY/LABORATORY SERVICES
DIVISION CONTACT: James W. Meyer
DIVISION CONTACT TEL#: (919)733-3908
DATE INITIATED: 7 '23/98
DURATION OF RULE: Permanent 4/1/99
TYPE OF RULE:
STAGE OF DEVELOPMENT: Draft Rule Stage
GOV LEVELS AFFECTED: Local
REASON FOR ACTION:
The present fee collection schedule is not adequate to support the program. To date, salaries have risen 24% for employees: travel
expenses have risen 25-30° o; operation costs for materials, supplies, equipment maintenance, etc. have risen 25-30° o. The abilit>'
to keep the program functional with these cost increases under the old fee schedule has become impossible, which has prompted
the proposed action.
SCOPE -NATURE/SUMMARY:
The purpose of these Rules is to set out certification criteria for laboratory facilities performing any tests, analyses, measurements.
or monitoring required under Article 21 of G.S. 143 or anv rules adopted thereunder, and to establish fees for certification.
APA #:E2681
SUBJECT: Permit Content
RULE CITATION #: ISA NCAC 2Q .0508
STATUTORY AUTHORITY: G.S. I43-2I5.3(a)(r); 143-215.65: 143-215.66: 143-215. 107(a)(10): 143-215.108
DIVISION/SECTION: AIR QUALITY
DIVISION CONTACT: Thorn Allen
DIVISION CONTACT TEL#: (919)733-1489
13:8
NORTH CAROLINA REGISTER
October 15. 1998
621
R ULE-MA KING A GENOA
DATE INITIATED: 8 12 Q8
DURATION OF RULE: Permanent
TYPE OF RULE:
STAGE OF DEVELOPMENT: Concept Stage
GOV LEVELS AFFECTED: None
REASON FOR ACTION:
To delete Paragraph (z) of Rule I5A NCAC 20 .0508. Permit Content.
SCOPE >.'.ATURE SUMMARY :
Paragraph (z) of Rule 1 5A NCAC 2Q .0508 states that "the permit shall not include sources for which there are no applicable
requirements." At the time that this language was adopted, the Division of Air Quality was under the impression that sources for
which there were no applicable requirements did not ha\e to be in a Title V permit. Hov\e\er. the EPA polic\ prohibits blanket
exclusion of sources for which there are no applicable requirements from permitting. Therefore, this Paragraph needs to be
remo\ed to present conflict with EPA's permitting requirements.
APA =: E2682
SUBJECT: New Source Performance Standards
RULE CITATION #: 15A NCAC 2D .0524
STATUTORY AUTHORITY: G.S. 143-2l5.3(a)(n: 143-215. 107(a)(5): 150B-21.6
DIVISION SECTION: AIR QUALITY
DIVISION CONTACT: Thom Allen
DIVISION CONTACT TEL=: (919)733-1489
D.ATE INITIATED: 8 12 98
DURATION OF RULE: Pemianent
TYPE OF RULE:
STAGE OF DEVELOPMENT: Concept Stage
GOV LEVELS A PFECTED: None
REASON FOR A TION:
To update exemptions and exclusions in 1 5 A Nl .AC 2D .0524. New Source Performance Standards.
SCOPE "N.ATURE/SUMMARY :
Rule 15.A NCAC 2D .0524 incorporates b> references the federal new source performance standards (NSPS) in 40 CFR Part 60.
It identifies sections of 40 CFR Part 60 that are not incorporated b> reference. Further, it identities categories of sources covered
under NSPS that are eligible for permit exemption. This rule needs to be re\ ised to update it and to correct an omission.
The permit exemption rule is in the process of being amended to allow exemption of certain municipal waste landfills from
permitting. Rule 15A NCAC 2D .0524 needs to be amended (in Paragraph (g)) to add municipal waste landfills to the list of
sources that are eligible for pemiit exemption.
Rule 15A NCAC 2D .0524 also needs to be amended to clarif\ that emission guidelines in 40 CFR Part 60 are not incorporated
b\ reference in this rule. This can be accomplished b> adding to Paragraph (b) this language: "Subparts identified in 40 CFR Part
60. Subpart C."
APA =: E2683
SUB.IECT: .Acti\ities Exempt from Permit Requirements
RULE CITATION =: 15A NCAC 20 .0102
STATUTORY AUTHORITY: G.S. 143-215.3(a)(l ): 143-215. 107(a)(4). (5); 143-215.108; 150B-21.6
DIVISION SECTION: AIR QUALITY
DIVISION CONTACT: Thom Allen
DIVISION CONTACT TEL=: (919)733-1489
D.ATE INITI.ATED: 8 12 98
DURATION OF RULE: Permanent
TYPE OF RULE:
STAGE OF DEVELOPMENT: Concept Stage
GOV LEVELS AFFECTED: None
REASON FOR ACTION :
To allow storage tanks co\ ered under 40 CFR part 60. Subpart K or Ka to use permit exemptions.
SCOPE ^.ATURE SUMMARY:
The permit exemption rule 15A NCAC 20 .0102. .Acti\ities Exempted from Permit Requirements. currentl_\ disqualifies, with
a few exceptions, sources subject to new source perfonnance standards. (NSPS in 40 CFR Part 60 are incorporated b\ reference
in the North Carolina rules under 15.A NCAC 2D .0524.) Currentl> tanks co\ered under 40 CFR Part 60. Subparts K and Ka. are
not eligible for permit exemption. To make these tanks eligible. Rule I5.A NCAC 20 .0102 needs to be amended. This eligibilit\
622 NORTH CAROLINA REGISTER October 15, 1998 13:8
RULE-MAKING AGENDA
would be limited to facilities not required to have a permit under Title V. This amendment would allow tanks covered under these
two subparts that store fuel oils to be exempted from permitting provided the tanks are at a facility not required to have a permit
under Title V. Also Rule 15A NCAC 2D .0524, New Source Performance Standards, would also need amending to reflect the
change in 15A NCAC 20 .0102.
APA #: E2684
SUBJECT: Activities Exempted from Permit Requirements
RULE CITATION #: 15A NCAC 20 -0102
STATUTORY AUTHORITY: G.S. l43-2l5.3(a)(l ): 1 43-2 1 5. 1 07(a)(4); 143-215.108
DIVISION/SECTION: AIR QUALITY
DIVISION CONTACT: Thom Allen
DIVISION CONTACT TEL#: (919)733-1489
DATE INITIATED; 8/12/98
DURATION OF RULE: Permanent
TYPE OF RULE:
STAGE OF DEVELOPMENT: Concept Stage
GOV LEVELS AFFECTED: None
REASON FOR ACTION:
To correct an omission that occurred with a previous amendment to 15A NCAC 20 .0102, Activities Exempted from Permit
Requirements.
SCOPE/NATURE/SUMMARY:
Subpart (b)(2)(E)(l) of 15A NCAC 20 .0102. which is the miscellaneous exemption, contains a list of activities ineligible for the
miscellaneous exemption. These activities are ineligible for the miscellaneous exemption because the Rule contains specific
exemptions for these activities. However, several of the specific combustion exemptions are currently worded such that they are
not available for Title V facilities. The specific exemption does not allow its use at a Title V facility. An example is
non-emergency generators. The rule should be amended to allow the use of the specific exemption for sources at Title V facilities
or to allow the use of the miscellaneous exemption for these sources at Title V facilities.
APA #: E2685
SUBJECT: Concrete Batch Plants
RULE CITATION #: 15A NCAC 2D .0541 (New Rule)
STATUTORY AUTHORITY: G.S. 143-2 l5.3(aKl): 143-2 15. 1 07(a)(5)
DIVISION/SECTION: AIR QUALITY
DIVISION CONTACT: Thom Allen
DIVISION CONTACT TEL#: (919)733-1489
DATE INITIATED: 8/12/98
DURATION OF RULE: Permanent
TYPE OF RULE:
STAGE OF DEVELOPMENT: Concept Stage
GOV LEVELS AFFECTED: None
REASON FOR ACTION:
To adopt a rule to control dust emissions form concrete batch plants.
SCOPE/NATURE/SUMMARY:
Concrete batch plants are a significant source of complaints and violations. The primary sources of problems are non-process
fugitive dust, such as dust from haul roads, and improperly maintained bag filters on storage silos. To address these problems,
a new rule is being considered to control fugitive dust from concrete batch plants and emissions for storage silos. The existing
fugitive dust control rule could be amended to extend it to concrete batch plants or the general fugitive dust control rule that is
being developed could include concrete batch plants. A specific rule ma> be developed to control emissions from storage silos.
APA #: E2697
SUBJECT: 1997-1998 Triennial Surface Water Quality Standards Review
RULE CITATION #: 15A NCAC 2B .0100 and .0200
STATUTORY AUTHORITY: G.S. 143-214.1
DIVISION/SECTION: WATER QUALITY
DIVISION CONTACT: Dianne Reid
DIVISION CONTACT TEL#: (919)733-5083
DATE INITIATED: 8/31/98
DURATION OF RULE: Permanent 8/1/00
13:8 NORTH CAROLINA REGISTER October 15, 1998 623
RULE-MAKING AGENDA
TYPE OF RULE;
STAGE OF DEVELOPMENT: Draft Rule Stage
GOV LEVELS AFFECTED: None
REASON FOR ACTION:
Ever\ three \ears. the U. S. Environmental Protection Agency (EPA) requires that the state review and revise, as necessary, the
surface water quahtv standards and classifications rules w hich are designed to protect human health and aquatic life. This review
process is mandated bv' the Clean Water Act and is termed the Triennial Review. The next reviev\' of North Carolina's water
qualits standards is to be completed b_\ September I, 1999 and submitted to the EPA. The proposed rule changes are part of the
Triennial Review process.
COPE "NATURE, SUMMARY:
The rule changes vsill include modifications to the surface water classifications and standards rules found in I5A NCAC 2B .0100
and .0200. The major issues in this Triennial Rev iew consist of corrections and clarifications and additions related to: nutrient
sensitive waters, endangered species, outstanding resource waters and the antidegradation policv'. These issues were identified
through consultation with the EPA and the Triennial Review Advisor, Committee (TRAC). The TRAC was formed by the
Division of Water Qualit) to provide more public input sooner in the rule-making process. Members of the TRAC included
environmental interests, local governments, business, industp. and state and federal agencies.
APA -: E2708
SUBJECT: Common areas and guestrooms v\ ithin lodging establishments
RULE CITATION #: 15ANCAC ISA .1808 and .1812
STATUTORY AUTHORITY: G.S. 130A-248
DIVISION-SECTION: ENVIRONMENTAL HEALTH. ENV. HEALTH SERVICES
DIVISION CONTACT: Susan Grayson
DIVISION CONTACT TEL^: (919)715-0923
DATE INITIATED: 9/24/98
DUR \TION OF RULE: Permanent
TYPE "^FRULE:
STAGE OF DEVELOPMENT: Draft Rule Stage
GOV LEVELS AFFECTED: None
SCOPE 'NATURE SUMMARY:
.1808 seeks to reduce lighting requirements in lobbies, halls, stairs, in hotels, motels, tourist homes and other lodging
establishments.
.1812 should reduce lighting requirements in guestrooms of hotels, motels and lodging establishments. It also eliminates the
requirement for sanitizing tableware in hotel efficiencies, per the ruling of the 1997 General Assembly.
624 NORTH CAROLINA REGISTER October 15, 1998 13:8
RILE-MAKISG PROCEEDIXGS
A Notice of Rule-making Proceedings is a statement of subject matter oftlie agency's proposed rule making. The agency must
publish a notice of the subject matter for public comment at least 60 days prior to publishing the proposed text of a rule.
Publication of a temporaiy rule serves as a Notice oj Rule-making Proceedings and can be found in the Register under the
section heading of Temporary Rules. A Rule-making Agenda published by an agency sen'cs as Rule-making Proceedings and
can be found in the Register under the section heading of Rule-making Agendas. Statutory reference: G S. 150B-21.2.
TITLE 15A - DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES
I5A NCAC lOC.OWO. .0200. .0300. .0400. Other rules may be
proposed in the course of the rule-making process.
CHAPTER 10 - WILDLIFE RESOURCES AND
WATER SAFETY
Authority for the rule-making: G.S. 113-132: 113-134: 113-
I3H: 113-2^2: 113-2-3: 113-292: 113-302: 113-304: 113-305.
SUBCHAPTER lOB - HUNTING AND TRAPPING
TV Totice of Rule-making Proceedings is hereby given by the
1 y North Carolina Wildlife Resources Commission in
accordance with G.S. 150B-21.2. The agency shall subsequently
publish in the Register the text of the rule(s) it proposes to adopt
as a result of this notice of rule-making proceedings and any
comments received on this notice.
Citation to Existing Rules Affected by this Rule-Making:
15A NCAC lOB.OlOO. .0200. .0300. Other rules may be
proposed in the course of the rule-making process.
Authority for the rule-making: G.S. 113-134: ll3-2'0: 113-
2-3: 113-2-4: 113-2-6: 113-291: 113-29-: 113-300: 113-305:
113-30-: 113-331: 113-333: 113-334: 113-337
Statement of the Subject Matter:
Trapping Regulations.
Set .Amend Hunting and
Reason for Proposed Action: To set amend hunting and
trapping regulations, seasons and bag limits, which are
necessary to manage and consent' the resource. The midlife
Resources Commission may adopt this rule as a temporary rule
pursuant to S.L. 199--0403 following this abbreviated notice.
Comment Procedures: The Record will be open for receipt of
written comments from October 15. 1998 to December 16. 1998.
Such written comments must be delivered or mailed to the North
Carolina Wildlife Resources Commission. 512 N. Salisbuiy
Street. Raleigh. North Carolina 2^604-1188.
Statement of the Subject Matter: Set/Amend Inland Fishing
Regulations including Jurisdiction of Agencies. General
Regulations. Game Fish and Nongame Fish.
Reason for Proposed Action: To set'amend inland fishing
regulations, size and creel limits, which are necessaiy to
manage and conserx'e the resource. The Wildlije Resources
Commission may adopt this rule as a temporaiy rule pursuant
to S.L. 199--0403 following this abbreviated notice.
Comment Procedures: This record will be open for receipt of
written comments jrom October 15. 1998 to December 16. 1998.
Such MTitten comments must be delivered or mailed to the North
Carolina Wildlife Resources Commission, 512 N. Salisbuiy
Street. Raleigh. North Carolina 27604-1188.
SUBCHAPTER lOD - GAME LAND
REGULATIONS
A Totice of Rule-making Proceedings is hereby given by the
J. y .\orth Carolina It'ildlife Resources Commission in
accordance with G. S. 1 50B-21.2. The agency shall subsequently
publish in the Register the text of the rulefsj it proposes to adopt
as a result oj this notice of rule-making proceedings and any
comments received on this notice.
Citation to Existing Rules Affected by this Rule-Making:
15A NC.4C lOD . 0002. . 0003. Other rules may be proposed in
the course of the rule-making process.
■K yt tc yt "K
SUBCHAPTER IOC - INLAND FISHING
REGULATIONS
'\ Totice of Rule-making Proceedings is hereby given by the
1 V North Carolina Wildlife Resources Commission in
accordance with G.S. 150B-21.2. The agency shall subsequently
publish in the Resister the text of the rule(s) it proposes to adopt
as a result of this notice of rule-making proceedings and any
comments received on this notice.
Citation to Existing Rules Affected by this Rule-Making:
Authority for the rule-making: G.S.
270. 113-291: 113-305: 113-306.
113-134: 113-264: 113-
Statement of the Subject Matter: Set Amend Game Lands
Regulations including General Regulations Regarding L'-ve and
Hunting on Game Lands.
Reason for Proposed Action: To set/amend seasons and
regulate manner oj hunting on game lands, which are necessaiy
to manage and consen'e the resource. The Wildlife Resources
Commission may adopt this rule as a temporaiy rule pursuant
to S.L. 1997-0403 jbllowing this abbreviated notice.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
625
RLLE-MAKI\G PROCEEDI\GS
Comment Procedures: This record will be open for receipt of
written comments from October 15. 1998 to December 16.
1998. Such written comments must be dehvered or mailed to the
North Carolina Wildlife Resources Commission , 512 A'.
Salisbury Sireet. Raleigh, \orih Carolina 2'604-llHH.
SUBCHAPTER lOF- MOTORBOATS AND
WATER SAFETY
A Tot ice of Rule-making Proceedings is hereby given by the
J. y Sorth Camlina Wildlife Resources Commission in
2 y .\ortl! Carolina Wildlife Resources Commission in
accordance with CS. 150B-2I.2. The agency shall subsequently
publish in the Resisier the text of the rule(s) it proposes to adopt
as a result of this notice of rule-making proceedings and any
ace
publish ,,, ,,.^ .>^^....w .,.t .^.w ^, ,,.^ ,
as a result of this notice of rule-ma,
comments received on this notice.
Citation to Existing Rules Affected bv this Rule-Making:
15.4 \C.4C I OF .1)31'. Other rules may he proposed in the
course of the rule-making process.
Authority for the rule-making: O' .S' '5.4-3: '5.4-15.
Statement of the Subject Matter: AC* WAKEZO.XES.
leason for Proposed Action: The Stanly Count}- Board of
Conuuissioners initialed the Xo-lt'ake Zone Modification
Pursuant to G.S. '5.4-15.
Comment Procedures: This record will be open for receipt of
written comtuents from October 10. 1998 to December 16. 1998.
Such written comments must be deliverd or mailed to the \orth
Carolina Wildlife Resources Commission, 512 A'. Salisbuiy
Sireet. Raleigh. \C 2 '604- 11 88.
TITLE I9A - DEPARTMENT OF TRANSPORTATION
CHAPTER 2 - DIVISION OF HIGHWAYS
SUBCHAPTER 2D - HIGHWAY OPERATIONS
A Totice of Rule-making Proceedings is hereby given by the
1 V \drth Carolina Department of Transportation. Divisions
of Highway in accordance with G.S. 150B-21.2. The agency
shall subsequently publish in the Register the text of the ridels)
it proposes to adopt as a result of this notice of rule-making
proceedings and any comments received on this notice.
Citation to Existing Rules Affected by this Rule-Making:
19.4 .\C.4C 02D.U415. Other rules may be proposed in the
course of the rule-making process.
Authority for the rule-making: G.S. 136-18(5).
Statement of the Subject Matter: Rule states conditions and
times for \orth Carolina drawbridges to open.
Reason for Proposed Action: ,4mendments are proposed as a
result of a request by the Carteret Count}' Board of
Commissioners. Drawbridge openings on US 70 over Beaufort
Channel in Beaufort are proposed to be reduced to alleviate
traffic congestion. Tlie U.S. Coast Guard approved the revised
opening schedule effective August 10. 1998.
Comment Procedures: .4ny interested person may submit
written comments on the proposed rule by mailing the comments
to Emily Lee. NC DOT PO Box 25201. Raleigh. AC 2'61l by
Februarv 15. 1999.
626
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
This Section conlains the text of proposed rules. .At least 60 days prior to the pitblieatioii oj text, the ageiiey pidilished a Notice
oj Rule-making Proceedings. The agency must accept comments on the proposed rule for at least 30 days from the publication
date, or until the public hearing, or a later date if specified in the notice by the agency. The recpiired comment period is 60 days
for a rule that has a substantial economic impact oJ at least five million dollars (S5. 000.000). Statutory reference: G.S. I50B-
21.:.
TITLE 1 - DEPARTMENT OF ADMINISTRATION
Notice is hereby given in accordance with G.S. 150B-21.2
that the Department of .Administration intends to adopt the
rulescitedas I NCAC 5B .0315-.0317. .1604-.1605. amend the
rules cited as 1 NCAC 5A .0001. .0008. .0012: J NCAC 5B
.010I-.0102. .0201. .0203. .0206. .0208. .0301. .0303. .0305-
.0306. .0309-.0310. .0314. .0503. .0601. .0701. .0901. .0905-
.0906. .1101-. 1102. .1105. I401-.I402. .1501. .1505. .1507.
.1509-.1513. .1518-.152I. .1601-.1603. .1901. .1903 and repeal
the rules cited as 1 NCAC 5B .0302. .0401 -.0403. .0801 -.0802.
.1301. .1303. .1517. .1906:1907. .1909 Notice of Rule-making
Proceedings was published in the Register on August 14. 1998
for I NC.4C 5A .0001. .0008, .0012: 1 NC.4C 5B.0101-.0102.
.0201. .0203. .0206. .0208. .0303. .0305-.0306. .0309. .0314.
.0901. .0905. .0906. .1101-. 1 102. .1105.
.1505. .150^. .1509-. 151 3. .1518. .1520-
.1901. .1903: 1 NC.4C 5B .0402-.0403.
.1909: 1 NCAC 5B .0315. .0317. . 1605:
Notice of Rule-making Proceedings Mas published in the
Register on March 2, 1998 for 1 NCAC 5B .0301-.03C2. .0310.
.0316. .0401. .0801 -.0802. .1301. .1519. .1604. .1906.
.0503.
.0601. .0701
1401-.
1402. .1501.
.1521.
.1601-. 1603.
.1303.
.1517 .1907
solicitations handled by the Division of Purchase cS- Contract,
universities and State agencies as well as contract language
consistency and protest procedures. These rule changes clarify
the process for all State prociuvment. which was altered
significantly by SL 1997-412.
Comment Procedures: .Any person interested in making
written or verbal comments to these proposed rule changes
should submit such comment to R. Glen Peterson. General
Counsel. NC Department of Administration. 116 West Jones
Street. Raleigh. NC 27603-8003: telephone (919) 733-^232: fax
(919) "33- 95 " I : email: glen _peterso)f a mail. doa. state, nc. us.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S5. 000.000) in a 1 2-month period.
CHAPTER 5 - PURCHASE AND CONTRACT
SUBCHAPTER 5A - DIVISION OF PURCHASE AND
CONTRACT
Proposed Effective Date: April I. 1999
A Public Hearing will be conducted at 2:00 p.m. on November
3. 1998 at the .Administration Building. ABC Conference Room.
5"' Floor 116 West Jones Street. Raleigh. NC 27603.
1 NCAC 5B .0101-.0102.
.0305:0306. .0309, .0314-
.0601, .0701, .0901, .0905-
.140 1 -.1402, .1501, .1505,
.1520:1521, .1601:1603,
■S.L. 1 99'-4 12 requires the
Reason for Proposed Action:
/ .VC4C 5A .0001, .0008, .0012;
.0201, .0203, .0206, .0208, .0303,
.0315, .0317, .0402:0403, .0503,
.0906, .1101:1102, .1105, .1303,
.1507, .1509:1513, .1517:1518,
.1605, .1901, .1903, .1907, .1909 ■
changing of certain rules relating to the increase in purchasing
benchmarks and delegation limits for universities and agencies.
In addition, there is a need to change clarif- other rules as they
pertain to the university and agency purchasing policies and
procedures us a result of the increase. Further modifications
are needed to improve the procurement process and to provide
more flexibility for the universities and agencies.
I SCAC 5B .0301:0302, .0310, .0316, .0401, .0801:0802,
.1301, .1519, .1604, .1906 - Session Law 1997-412 amended
State procurement Icm'S. increasing benchmarks for universities
and State agencies, and also mandated the Secretaiy of
.Administration to make rules in certain areas of procurement as
a result of the benchmark changes. These include advertising of
.0001 RESPONSIBILITY
The Department of Administration is responsible for
administering the state's program for the acquisition,
management, and disposal of personal prop e rty*, property, as well
as. the acquisition of services for jts agencies. The Secretary of
the Department of Administration (Secretary) is authorized and
responsible for adopting and carrying out the rules promulgated
herein. The administration of this program is delegated to the
State Purchasing Officer (SPG) who reports to the Secretary.
Authority G.S. 143-49.
.0008 FORMS: PROCEDURES: TERMS AND
CONDITIONS
The Division of Purchase and Contract establishes procedures
for acquiring e quipm e nt, mat e rials, suppli e s, commodities.
printing and services and prescribes fomis, consistent language.
terms and conditions applicabl e — te — seeli — act i ons, and
advertisement requirements, applicable to all agencies for such
action. The procedures, forms, consistent language, ternis and
conditions and advertisement requirements shall be established,
taking into consideration market conditions and trends, legal
requirements, and factors detennined to be jn the state's best
interest. These shall be furnished to aJJ agencies.
Authority- G.S. 143-51: 143-53: 143-55: 143-60.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
627
PROPOSED RULES
.0012 DEFINITIONS
(a) For the purpose of this Chapter. agenc\ is defined as all
departments, institutions, boards, commissions. uni\ersities. or
other units of the Stat e . State (includina the Division of Purchase
and Contract), and communit\ colleges and local school
administrative units, unless specificalK exempted herein b\
reference. For the purpose of identilMn" a special responsibilits
constituent institution, as designated In the Llni\ ersits Board of
Go\ernors. just the name "uni\ersit\(ies)" shall be used to
distinguish any differences in the rules.
(b) A ser\ ice contract shall mean an\ agreement in which an
independent contractor performs ser\ ices requiring specialized
knowledge, experience, expertise or similar capabilities for a
state agencN for compensation from stat e fund s . in\oKing an
expenditure of public funds. The ser\ ices ma_\ include (b\ \\a>
of illustration, not limitation) services such as maintenance of
buildings or equipment, auditing, film production, emplovee
training and food services, provided that the service is not
primarilv for review, analvsis or advice in formulating or
implementing improvements in programs or serv ices (in v\hich
case rules relating to consultants shall be applicable).
(c) U'here the tenn "offer" is used, it refers to a bid. proposal
or offer submitted in response to an Inv itation for Bids. Request
for Proposals. Negotiation, or Request for Quotations.
(d) For the purpose of this Chapter, commodit^(ies) is defined
as any equipment, materials or supplies, h does not include
services or printing.
AulhorinU.S. 143-49: 143-53: 143-53.1: 116-31. lU.
SUBCHAPTER 5B - PURCHASE PROCEDURES
r e qu e sting agencv user and modified as necessar> h\ the
Division of Purchas e and Contract, to accomplish the intent of
the rules of this Subchapter. It shall b e . bv the natur e of th e
commodity' or patt e rn of us e r d e mand, not int e nd e d for r e p e titiv e
use; Sometimes, such other tv pe specifications mav be pr e s e nt e d
in th e form of used, including, but not limited to. "brand name
or equal" or. in th e form of or "brand name onlv specific".
.Authority G.S. 143-49(2): 143-53.
.0203 DEVELOPMENT OF SPECIFICATIONS
|a) A standard specification is intended for general use.
applicable insofar as practicable to the needs of agencies and
kept current bv the Standards S e ction. Division of Purchase and
Contract. In fomiulating such a specification, advisorv
committees made up of personnel from various agencies, and the
private sector are often employed for advice and assistance.
This type of specification is customarily offered also for the
review and comments of manufacturers and suppliers who mav
participate in future bidding on the items in question.
(b) North Carolina's purchasing program is built on the
principle of competition. There js a dutv to seek competitive
offers, except as mav be permitted by statute or rule, from
qualified and res ponsible sources of supply. Where competition
is available, h js every purchaser's responsibility to use write
specifications and requirements that are reasonable to satisjy the
need, but not undulv restrictive, which shall encourage
competition [n the open market and result in the best possible
contract for the commodity, printing or serv ice needed.
.4llthorI^^■G.S. 143-49i2i: 143-53.
SECTION .0100 - REQUISITIONING
.0101 PROCEDURE
Using agencies shall request quotation, bid and purchase
actions of the Division of Purchase and Contract bv means of
electronic or w ritten requests.
.Atithority-G.S. 143-49: 143-51: 143-55.
.0102 NERBAL REQUESTS
Verbal or other means of request are not satisfactory
substitutes for electronic or written requests except in
emergencies. Electronic or Writt e n written confirmation must
follow any such request made in an emergency situation.
.Aiithont}-G.S. 143-49: 143-51: 143-55.
SECTION .0200 - SPECIFICATIONS
.0201 TYPES OF SPECIFICATIONS
There shall be two general types of purchase specifications.
.\ standard specification shall be originated and developed bv
the Standards S e ction. Division ot" Purchase and Contract. It
shall be comprehensive in nature and intended for repeated use.
The other tvpe of specification shall be originated bv the
0206 SUBMISSION FOR ADOPTION
Upon completion of all necessary studies, rev iews and drafts,
any proposed standard specification shall be submitted to the
SPO for consid e ration and r e comm e ndation to th e Secr e tary'.
consideration. When a specification is adopted as a standard, it
becomes applicable to state agencv purchases generally. A
standard specification may be modified bv the Division of
Purchase and Contract on an interim basis as deemed necessary
or advantageous until such time as the S e cr e tary SPO can
consider the proposed rev ision.
.-tiithoiit}- G.S. !43-49(2i: 143-53.
0208 QUALIFIED PRODUCTS LIST
A qualified products list (QPD is a t>pe of specification
which mav be adopted as a standard, standard by the Division of
Purchase and Contract. The essential characteristic of this
procedure is the examination and prequalification of brands and
models of products on the basis of samples and tests. The
prequalification limits bidding offers to products included on the
list (OPD- Vlanufacturers are invited to submit products for
evaluation and inclusion on the list. Sources for manufacturers
are the Division's active bidder mailing -Ikts lists, if still
maintained, and notifications of interest received in advance
from other firms. The Division mav impose a deadline for
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submission of samples. If a product is added to the list, it is then
eligible to be offered against an Invitation for Bid s , jn response
to a solicitation document.
Authority- G.S. 143-49(2): 143-53.
SECTION .0300 - PROCUREMENT AUTHORIZATION
AND PROCEDURES
.0301 CONTRACTING REQUIREMENTS
(a) W h e r e th e total requirem e nts for any giv e n commodity' or
s e rvic e involv e an exp e nditur e in e xc e ss of th e e xp e nditur e
b e nchmark e stablished und e r th e provisions of G.S. M3 53.1.
and wh e re competit i on is s o l icit e d, s e al e d offer s s hall b e
solicit e d b\ dir e ct mailing. Rul e s applying to se rv i c e contract s
do not apply to local s chool administrativ e units or communitv.'
co l l e g e s.
(%) — In addition to Paragraph (a) of this Rul e , for th e
procur e m e nt of e quipm e nt, materials, and suppli e s, s e al e d off e rs
s hall b e solicit e d b\ th i s Division by dir e ct mail and by
adv e rtis e m e nt in a n e wspap e r of stat e wid e circulation or by
e l e ctron i c m e dia when deemed more ad\antageou5 for c e rtain
it e ms or commoditi es at l e ast — 1 days prior to th e dat e
d e signat e d for op e ning of th e bids.
(e) — In addition to Paragraph (a) of this Rul e , for th e
procur e m e nt of s e rvic e s, th e following shal l apply:
f+^ Th e final d e cis i on making authority in r e gard to any
phas e of procur e ment or p e rformanc e of an\ servic e
contract is with th e SPO. — In addition to s e rvic e
contract s d e l e gat e d und e r Rul e s .O 'l Ol and .1301 of
this Subchapt e r, th e SPO max d e l e gat e ag e nci e s th e
authority to hand le th e solicitation phas e for contracts
ov e r th e b e nchmark e stablish e d und e r G.S. 1 4 3 53.1.
{¥) For e ach s e rvic e contract, th e using ag e ncy s hall
pr e par e a task d e scription of th e serv i c e s and d e sir e d
r es ults. For stat e wid e or multiagency term contracts
this Division will e stab l ish th e ta s k d e scription of
se rvic e s and d e sired results. Ta s k d e scriptions shall
contain all of the following:
bM the date(s) of s e rvic e (Th e contract shall not b e
for more than thr ee y e ars including e xt e nsions
and r e newals, without th e prior approval of th e
SPO.):
{B) detailed s p e cifications or typ e and l e v e l of
work r e quir e d;
{G) what th e Stat e will furnish:
fB^ what th e contractor will furni s h:
fE^ th e m e thod, sch e dul e , and proc e dur e s for
billing and paym e nts:
fF^ other terms and conditions, sp e cifications or
proc e dures b e aring on th e conduct of th e work.
f34 Upon completion of th e task d e scription and d es ir e d
r e sults. — compet i tion — shaH — be — so l icit e d. — v\ h e r e
availabl e , utilizing a RFP or IFB. which shall contain
th e task d e scription and desir e d r e sults, and sp e cify or
provid e for all of th e following:
fA-) — th e laws of North Carolina s hall gov e rn th e
contract;
fB) th e contract shall — b e cancelabl e upon a
s p e cifi e d writt e n notic e at any t i m e by the State
for unsati s factory p e rformanc e or for the
conv e nience of th e Stat e ;
(€) provid e for th e option to require a performance
bond or oth e r suitabl e m e an s of ensu i ng
faithful p e rformanc e wh e n d ee m e d by the State
to b e n e c e ssary ;
{&) that the contract i s e nt e r e d into in comp l ianc e
with Stat e and Federal antitrust laws;
(£^ the — contractor — slwH — furnish — aW — work e r's
comp e nsation, liability insuranc e , and oth e r
insuranc e as may b e r e quired to prot e ct hims e lf
and th e Stat e from claims which may aris e ;
fF^ paym e nt sch e dul e ;
{G^ pric e adjustm e nt provisions, if any;
{U) id e ntify th e ag e ncy liai s on p e rsonnel and any
oth e r ag e ncy r es ourc e s that will b e available to
th e contractor:
<-l^ th e crit e ria for e valuation;
(J^ r e qu es t — a — d e scription — of — the — offeror's
qualifications and r e f e rences:
<-14) have the cost of th e s e rv i ce broken down by
compon e nts;
(t^ have — the — offeror — id e ntify — the — proposed
methodology for accomplishing the work (if
not furnished in th e RFP).
An e xc e ption to Paragraph (c) of this Rul e i s wh e r e an
e m e ra e ncv condition e xists.
(4)-
Aft e r op e ning, and compl e tion of th e e valuation, th e
u s ing ag e ncy shall pr e par e a writt e n r e comm e ndation
for award, and if over th e b e nchmark e stablished
und e r G.S. 1 4 3 53.1. shall s ubmit a cop\ of all off e rs
r e c e iv e d and th e ir r e comm e ndation to this Division
for award of contract or oth e r action d ee m e d
n e c e ssary b\' th e SPO (Examp les : canc el lation.
negotiation, e tc.). Notice of th e Division' s deci s ion
shall b e sent to the using agency.
Except where a waiver, special delegation, exemption, or an
emergency purchase is permitted b\ rule, all purchases involving
the expenditure of public funds made by universities and other
agencies for commodities, services and printing, not covered by
statewide tenn contracts, shall comply with the following
delegations and procedures:
( 1 ) Small Purchases: A small purchase is defined as the
purchase of commodities, services or printing, not
covered by a term contract, involving an expenditure
of public funds of five thousand dollars (S5.000) or
less. The executive officer or his designee, of each
agency shall set forth, jn writing, purchasing
procedures for making small purchases. The
awarding of contracts for small purchases shall be the
responsibility of the using agency. The SPO may
require a copy of the small purchase procedures be
sent to the Division of Purchase and Contract.
(2) Purchases Governed by General Delegation or
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PROPOSED RULES
Statute:
(a) For purchases made b\ a u^i\ersit^ or aaencv
invoK ing an expenditure of public Funds over
five thousand dollars ($5.000). up to the
benchmark established for a uni\ersit\ under
the provisions of G.S. 116-31.10. and up to the
general delegation limit for agencies
established b\ the SPO under the prov isions of
G.S. 143o3(a)(2):
(_ij Competition shall be solicited:
(ii) Solicitation documents requesting or
inviting offers shall be issued:
(iii) Solicitation documents shall include
standard language, including terms and
conditions issued bv the Div ision of
Purchase and Contract, unless prior
written approval js obtained from the
Division. jf additional temis and
conditions are used, thev shall not
conflict with Division's standard terms
and conditions, unless prior written
approval is obtained from the Division:
and
(iv) Mailing lists, if still maintained bv the
Division of Purchase and Contract, mav
be requested and used jn addition to
mailing lists maintained bv the
universit^ or agencv for the purpose of
soliciting competition.
(b) in addition, agencies and universities shall
advertise their solicitations through the
Division of Purchase and Contract, effective
September _L 1998. for the follov\ing
purchases:
{]} Agencies: For purchases involving an
expenditure of public funds exceeding
ten thousand dollars (SI 0.000). up to the
general delegation limit for an agencv
established by the SPO under the
provisions of G.S. l43-53(a)(2):
(ii) L'niversities: For purchases involving an
expenditure of public funds exceeding
twenn five thousand dollars (S25.000).
up to the benchmark established for a
universit\ under the provisions of G.S.
116-31.10.
Agencies and universities mav advertise sooner
than the effective date and ma\ also advertise
solicitations on smaller dollar purchases
through the Division of Purchase and Contract.
(c) The awarding of contracts under the statutory
limit for universities and the general delegation
for all other agencies, shall be the
responsibility of the using agencv.
(3) Competitive Bidding Procedure: Where the total
requirements for commodities, services or printing
jobs involve an expenditure of public funds in excess
ill
of the expenditure benchmark established under the
provisions of G.S. 1 16-31 .10 or the general
delegations established by the SPO under the
provisions of G.S. l43-53(a)(2). the competitive
bidding procedure as defined in G.S. 143-52 shall be
utilized as follows:
(a) Sealed offers for commodities and printing
shall be solicited by ihe Division of Purchase
and Contract v ia adv ertisement:
(b) For serv ice contracts, the SPO delegates to the
universities and other agencies the authority to
solicit sealed offers for their university agencv
in accordance with the rules established for
Subitems (2)(a) and (b) of thjs Rule. .After
opening and completing the evaluation of
offers received, the agencv shall prepare a
written recommendation for award, and if over
the benchmark established under G.S. 1 16-
31.10 or the general delegations established bv
the SPO. shall submit a copy of aH offers
received and their recommendation of award or
other action to the Division of Purchase and
Contract for approval or other action deemed
necessary bv the SPO (Examples: cancellation,
negotiation, etc.). Notice of the Division of
Purchase and Contract's decision shall be sent
to the agency. The awarding of contracts for
services shall be the responsibility of the using
agency:
(c) Sealed offers for statewide term contracts for
commodities, printing and services shall be
solicited by' the Division of Purchase and
Contract via adv ertisement:
(4) For each serv ice contract handled bv the agencv. the
agency shall prepare a task description of the services
and desired results. Task descriptions shall contain all
of the following:
(a) The date(s) of service (The contract shall not
be for more than three years including
extensions and renewals, without the prior
approval of the SPO.):
(b) Detailed specifications or type and level of
v\ork required:
W hat the State shall furnish:
m
What the contractor shall furnish:
The method, schedule, and procedures for
billing and payments: and
Other subject matters bearing on the conduct of
the work.
Rules applying to service and printing contracts do
not apply to local school administrative units or
community colleges.
Auihorin- U.S. 143-49: 143-52: 143-53: 143-53.1.
.0302 .MAILING LISTS (REPEALED)
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PROPOSED RULES
Authority G.S. 143-49: 143-52.
.0303 TELEGRAPH, FACSIMILE, AND
TELEPHONE OFFERS
Telegraph, facsimile, and telephone bids or proposals ar e not
acc e ptabl e offers shall not be accepted in response to s e al e d
comp e t i tive bids or proposals, solicitations that are required to
be sealed.
Authority- G.S. 143-49: 143-52: 143-53.
.0305 PUBLIC OPENING
(a) Advertised procurements shall be publicK op e n e d, in
accordanc e with the procur e m e nt docum e nt instructions, opened
at the time, date, and place identified jn the procurement
document. At the time of opening, the The names of the
companies, the manufacturer! s) and catalog number(s) of the
item(s) they have offered and the prices, deliveries and pavment
terms they have submitted shall be tabulated and this tabulation
shall become public r e cords subj e ct to th e provisions of Rul e s
.030Q and .1501 of this Subchapt e r, record, except as provided
in Paragraph (b) of this Rule.
(b) Under a two step process the cost/price offer shall not
become public record until the technical offer(s) has been
evaluated (first step) and then onlv those determined, by the
agencv which issued the solicitation document, to have an
acceptable technical offer shall have their cost/price offer
opened (second step). The cost/price otTers from offerors whose
technical offer was deemed unacceptable shall remain unopened.
The opening of the cost'price offers shall be publicK opened, by
means of notifsing the companv(s) with the acceptable technical
offer(s) of the time and place for the opening. At least two
agencv working days notice shall be given prior to the opening.
In addition, there shall be at least two agency employees present
at the opening.
Authority G.S. 143-49: 143-52: 143-53.
.0306 LATE OFFERS. MODIFICATIONS, OR
WITHDRAWALS
No late offer, late modification, or late withdrawal shall be
considered unless received before contract award, and the offer,
modification, or withdrawal would have been timeK but for the
action or inaction of State agency personnel directly serving the
procurement process. It is the sole responsibility of the offeror
to have his offer delivered on time, regardless of the mode of
delivery used, including the U.S. Postal Service or any other
delivery services available.
Authority G.S. 143-49: 143-52.
.0309 EVALUATION
In d e termining th e award of contracts, bona fid e offers s hall
b e considered and e valuated as provid e d b)' statut e and
applicab le rules. Un e x e cuted offers or an off e r without delivery
shall not b e accept e d. Nonaccoptanc e of an off e r shall not be
constru e d as outright r e j e ction or that it lacks m e rit but that
anoth e r is d ee m e d more advantag e ous. — During th e p e riod of
evaluation and prior to award, poss e ssion of th e off e r s and
accompanying infoimation shall b e limit e d to p e rsons designated
by th e SPO. and to thos e in using agenci e s who ar e r e spon s ibl e
for participating in the evaluation. Aft e r award of th e contract,
th e compl e t e fi le shall b e availabl e to any int e r e st e d p e r s on with
th e e xc e ption of trade secrets subject to th e provisions of Rul e s
.1501 and .1518 of this Subchapter.
(a) In determining the award of contracts, bona fide offers
shall be considered and evaluated as provided by statute and
applicable rules. The evaluation criteria to be used jn
determining the award of contract shall be identified jn the
procurement document.
(b) An unexecuted offer or an offer without a delivery time
shall be rejected.
(c) During the period of evaluation and prior to award, only
the information provided m the tabulation is public record.
Possession of offers, including any accompanying information
submitted with the offers, shall be limited to persons jn the
agencv who are responsible for handling the offers and
accompany ing information, and to others determined necessary
by the agencv' which issued the solicitation document, for the
purpose of evaluation and award of contract. Offeror
participation jn the evaluation process shall not be permitted.
Any communication with an offeror that may be necessary for
purpose of clarification of their offer shall be conducted by the
agencv which issued the solicitation document. After award of
the contract or the need for the item or service js canceled, the
complete file shall be available to any interested party with the
exception of" trade secrets subject to the provisions of Rules
.1501 and .1518 of this Subchapter.
Authoiit}- G.S 143-49: 143-52: 143-53.
.0310 NOTIFICATION OF AWARD
Jf a solicitation js required to be advertised through the
Division of Purchase and Contract, then notice of the resulting
contract award shall be posted via the Division of Purchase and
Contract's home page by the agencv issuing the solicitation
document jn accordance with Rule .0316 of this Section. In
addition. Aft e r after contracts are awarded, successful
companies and agenci es shall be notified in writing or
e l e ctron i cally, electronically by the agency issuing the
solicitation document.
Authority G.S. 143-49: 143-52: 143-53.
.0314 SOLICITATION DOCUMENTS
(a) An alternate acqui si tion procurement method to the
Invitation for Bids (IFB) is a Request for Proposals (RFP).
When using a RFP, the rules of Subchapters 5 A and 5B of this
Chapter shall also apply. A RFP may also be handled as a two
step process.
(-H For th e purcha se of e quipm e nt, mat e rials and suppli e s
(commoditi e s), wh e n us i ng a RFP, th e rul e s of this
Subchapt e r shal l apply.
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PROPOSED RULES
(^ Th e Rul e s applying to th e use of a RFP for s e rvic e
contract s ar e sp e c i fi e d in Rul e .0301 of th i s S e ction,
(b) A RFP may also b e hand le d as a two st e p proc e ss. Wh e r e
Q two st e p proc e ss is us e d only th e t e chnica l propo s al shall b e
opened on th e op e ning dat e . Th e cost propo s al s hall b e op e n e d
on l \ if the t e chn i cal propo s al is d e t e rmined b_v th e Stat e to b e
a cc ep ta ble .
(b) For the purpose of Subchapters 5A and 5JB of this
Chapter, a solicitation document is defined as a written Request
for Quotes (RFQ). RFP or an IFB.
(c) All agencies shall use the IFB or RFP document,
whichever js applicable, when soliciting competition on
contracts valued over tw ent\ five thousand dollars ($25.000).
The IFB and RFP solicitation documents used b\ agencies shall
require bidders or otTerors to certit\ that each bid or offer js
submitted competitiveh' and w ithout collusion.
AulhoriiyGS. 143-49: 143-52: 143-53: 143-54.
0315 DIVISION OF REQUIREMENTS
An agencN shall not divide requirements in order to keep the
expenditure under their benchmark or delegation, and thereb\'
avoid following the appropriate contracting requirement, in the
case of similar and related items and groups of items, the dollar
limits apply to the total cost rather than the cost of an\ single
item.
AulhnrinG.S. 143-52: 143-53.
0316 ADVERTISEMENT REQUIREMENTS
(a) Unless already required by statute, effectiv e September I.
1998 all advertisements required by rule shall be through the
Division of Purchase and Contract via the Division's home page
on the internet, ft" advenisement js required by rule, the .Aiiihority G.S. 143-52: 143-53.
solicitation shall be advertised at least once and at least 10 days
(d) The exact format and instructions for submitting the
advertisement, summary notice, and award notice will be
furnished to aj] agencies l>y Ihe Division.
(e) Exceptions to this Rule are as follows:
(I ) When it is deemed by the agency "s executive officer
or lijs designee that there js a valid reason for the
agency not to transmit the advertiseinent or award
notice electronically, that agency mav submit the data
to tlie Division, so tlie Division may transmit jt
electronicallv; or. the agencv may place the
advertisement (excluding the complete solicitation
document) via newspaper. ff advertised via
newspaper, the agency which issued the solicitation
document shall be responsible for the advertisement
and the av\ ard notice shall not be req uired. Some
valid reasons include comp uter equipment failure or
networking diftlculties. or insufficient copies of
samples for a printing job.
If there js an attachment to a solicitation that the
agency determines will not l3e electronically
transmitted, then the solicitation document, w hen
electronically transmitted, shall include instructions to
contact the agencv which issued the solicitation to
obtain the attachment.
{21
(3) If an agency detenu ines that jt js not feasible to
electronicallv transmit a particular solicitation
document through the Div ision's home page, then the
agency shall electronically transmit a summary notice,
the same way as jf they had electronically transmitted
the solicitation document, which will instruct
someone inquiring on the Div ision's home page about
the solicitation, to contact the agency for a hard copy.
prior to the date designated for opening. This Rule does not
prevent solicitation of offers by additional direct mailings or
additional advertisement by an agency.
(b) Agencies required bv rule to advertise their solicitations
shall electronically transmit the required data directly to the
Division's home page. The required data shall include, the
complete solicitation document (specifications, requirements,
terms and conditions, etc), with agencv name, buver name-
phone number and address for accessing hard copies ot' the
solicitation, solicitation identification number, title [a short
description of die commodity, service or printin g requirement),
and the opening date, time and place, if the solicitation requires
potential otTerors to attend a mandatory conference or mandatory
site visit, this information shall also be furnished with the
advertiseinent. to include date and time, location, and contact
person and phone number.
(c) Within three agency working davs from award of contract
that has been advertised through the Division, agencies shall be
required to electronically transmit an award notice directly to the
Div ision's home page on the internet. The award notice shall be
posted for at least 30 consecutive calendar davs. This aw ard
notice shall identify the contract and award infonnation.
.0317 MANDATORY CONFERENCES/SITE
VISITS
(a) It is recommended, except in unusual cases, for agencies
to only urge and caution potential offerors to attend scheduled
conferences or site visits.
(b) When a solicitation requires potential offerors to attend a
mandatory conference or mandatory site visit, the date, time,
location, and other pertinent details of the conference or site visit
shall be given in the solicitation document, and
the
advertisement (if required by rule).
(c) if only one potential offeror attends the mandatory
conference or mandatory site visit, the conference or sjte visit
be
If
may continue to be conducted, but tfie solicitation shall
canceled immediately following the conference or site visit
this occurs, the agencv shall investigate whv only one potential
offeror was in attendance and ascertain jf there js any
competition available, if jt js detennined that competition js
available, the agency shall again attempt to obtain competition
by following the rules of thjs Subchapter, unless othenvise
permitted bv rule, if it is determined that there is no competition
available, then the procurement may he handled as a waiver as
permitted bv rule.
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PROPOSED RULES
(d) Any and aU questions by a compan\ regarding a
solicitation document shall be addressed to the purchaser named
on the document. Any and aH revisions to the solicitation
document shall be made only by written addendum from the
purchaser. Verbal communications from w hatever source are of
no effect.
Authority G.S. 143-52: 143-53.
SECTION .0400 - INFORMAL PROPOSALS
(QUOTATIONS) PROCEDURE
.0401 GENERAL DELEGATION (REPEALED)
Authority G.S. 143-52: 143-53: 143-53.1.
0402 REVIEW BY BOARD OF AWARD AND
SECRETARY OF ADMINISTRATION
Th e r e vi e w and award proc e dur e is not a requirem e nt in acting
on propo se d contracts l e ss than th e b e nchmark establish e d in
G.S. 143 53.1. How e v e r, any controv e rsial matt e rs or qu e stions
of policy which might b e involv e d in th e s e propos e d contracts
may b e r e vi e w e d with th e Board of Award and S e cr e tary'.
Authority G.S. 143-52: 143-53.
.0403 DIVISION OF REQUIREMENTS
An ag e ncv shall not divid e r e quir e m e nts in ord e r to k ee p them
und e r th e e stablish e d b e nchmark or g e n e ral d e l e gation amounts.
artd — th e r e by — avoid — the — r e quir e d — comp e t i tiv e — bid proposal
proc e dur e or th e r e quir e d quotation proc e dur e , which e ver
appli e s. In th e cas e of similar and r e lat e d it e m s and groups of
it e ms, th e dollar limits apply to th e total cost rather than the cost
of any singl e it e m .
Authority G.S. 143-52: 143-53.
SECTION .0500 - REJECTION OF OFFERS
0503 NEGOTIATION
If a ll offers arc r e j e ct e d, th e S e cr e tary may author i z e th e SPG
to negot i ate the purchas e , with th e avsard of contract handl e d in
accordanc e with th e rul es in this Subchapt e r
If an agencv does not receive a satisfactor\ offer in response
to a solicitation and all offers are rejected, negotiations mav be
conducted with all known qualitled sources of supply to satisfy
the requirement, if it is determined by the agency that issued the
solicitation document that soliciting offers again would serve no
purpose. The negotiations shall be conducted by that agency if
under their benchmark or delegation. Negotiations shall be
conducted in writing and shall include standard language and
terms and conditions issued by tfie Division of Purchase and
Contract, unless otherwise provided by rule, ff tfie negotiations
are conducted with only one source or if only one source
responds to the negotiations, the reason for lack of competition
shall be documented in writing for public record. Negotiations
may also be conducted under conditions that merit a y\aiver of
competition, or in other situations that are advantageous as
determined by the SPO.
Authority- G.S 143-52: 143-53: 143-60.
SECTION .0600 - PURCHASE OF USED ITEMS
.0601 GENERAL PROCEDURES
Wh e n it app e ars to th e SPO that th e acquisition of us e d
e quipm e nt, mat e rials or suppli es is in the public int e r es t,
competit ive p roce dur e s shall b e follow e d wh e r e ver feasible.
Rules of this Subchapter regarding seeking competition shall
be followed, wherever feasible, when h appears that the
acquisition of used commodities is jn the public interest.
AuiliorityG.S 143-53.
SECTION .0700 - REMOVAL OF CERTAIN ITEMS
FROM GENERAL CONSTRUCTION
.0701 POLICY
As may b e practicabl e , th e S e cr e tary' may r e mov e it e ms from
g e n e ral construction contracts and r e quir e thos e it e ms to be
purcha se d und e r th e rul es of this Chapt e r.
Every agency shall thoroughly review the items being included
in a construction/ renovation project and remove any items that
they consider are non-related to frie actual
construction renovation of the building. items that are
considered commodities, or just furnishings, to complete the
project for use by tlie agency, shall be handled in accordance
with the rules ot" tfus Chapter. Items that are usually removed
for construction renovation projects include carpet, office panel
systems, food service equipment, and furniture. If an agency
determines that one of these items, or any item that is normally
handled as a commodity purchase, is best suited for inclusion jn
the construction renovation project, their justification shall be
documented in writing for public record.
Authority- G.S 143-53.
SECTION .0800 - PRINTING
.0801 GENERAL POLICY (REPEALED)
Authority G.S. 143-49: 143-53.
.0802 PROCEDURE (REPEALED)
Authority G.S 143-49: 143-53.
SECTION .0900 - INSPECTION AND TESTING
.0901 RESPONSIBILITY
In general, it is the responsibility of the receiving agency to
inspect all mat e rials, suppli e s, and equipment commodities.
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PROPOSED RULES
services and printing upon deli\er\ to insure compliance witli
the contract requirements and specifications. How e v e r, wh e n
th e contract r e quir e s an insp e ction by th e Divi s ion of Purchas e
and Contract, it shal l b e conduct e d by a d es ign ee of th e Division.
However, there are certain commodities that require inspection
by a designee ot" the Division ot" Purchase and Contract. When
purchasing one of those commodities, agencies shall include jn
their solicitation document the requirement that payment for the
commodirv shall be subject to the inspection and acceptance of
the commodity by a designee of the Division. The commodities
listed, as determined by the SPO. are based on their complexity
and cost, and shall be furnished to all agencies.
AiahoriixG.S. 143-53: 143-60.
covered by a statewide term contract from any other sources.
(c) A term contract is based upon competition, where
available with the companies being advised as to yvhose business
they are competing for and. if successful, whose business they
have earned.
(d) Agencies may handle agency specific term contracts for
use by their agency jf the expenditure over the term of the
contract is under their benchmark or delegation, and the
commodity, printing, or service js not covered by a statevNJde
tenn contract.
(e) Rules applying to service and printin g contracts do not
apply to local school administratixe units or community colleges.
AuthohnG.S. 115C-522: II5D-5H.5: 143-52: 143-53: 143-55.
.0905 SPECIFICATIONS
Ih e SPO When h [s determined to be adyantageous. the
agency which awarded the contract may authorize re\ isions to a
contract sp e cificat i on, specification, including any cost
adjustment associated with any such rey ision. as part of contract
administration. JJ" an increase [n cost results in the total contract
value being more than the agency's benchmark or delegation,
then prior xvritten approval shall be obtained from the Division
of Purchase and Contract, regardless of who initially awarded
the contract.
Authority (J.S. 143-53: 143-60.
.1102 DETERMINING FACTORS
In determining whether a product should be on a statewide
tenn contract, the Division consid e rs shall consider such factors
as volume, nature of the product, repetitiveness of use. relative
stability of prices, transportation costs and other appropriate
considerations. In determining whether a product should be on
an agency specific term contract, the agency shall consider such
factors as volume, nature of the product, repetitiveness of use,
relative stability of prices, transportation costs and other
appropriate considerations.
Authority G.S. 143-52: 143-53: 143-55.
.0906 REPORT OF DISCREPANCY
Where product s commodities, services or printing delivered
fail to meet the specifications or contract requirements, the
discrepancy shall be r e port e d to th e Division of Purchas e and
Contract for r e solution, resolved by the agency which issued the
solicitation document.
Authority GS. 143-53: 143-60.
SECTION .1100 - TERM CONTRACTS
.1101 USE
(a) Tenn contracts, known also as indefinite quantity or
requirements contracts, are used generally to establish suppliers
and prices of a giyen commodity, group of commoditi e s
commodities, printin g, or services for a period of time w ithout
guaranteed quantities being specified. Such contract s g e n e rally
serve Statexs ide tenn contracts shall be handled bv the Division
of Purchase and Contract and are used generally to consolidate
normal requirements of various ah agencies into one agreement.
While many of the state's tenn contracts are effective for a
period of one year, conditions sometimes call for issuance for a
shorter or longer period.
(b) A term contract is a binding agreement between purchaser
and seller to buy and sell certain commoditi e s commodities,
printing, or services at certain prices and under stipulated terms
and conditions. It is neither an "approved list" nor a list of
approved or ceiling prices. No agency may purchase any
suppli e s, mat e r i als, equipment commodities, printing, or services
.1105 SPECIAL ITEMS
In situations where a general ty pe of item is covered by a term
contract but a special type item is needed for a particular
application, the Division s hould b e consu l t e d for appropriat e
act i on, agency mav proceed with the purchase of the special
type item under the rules of this Chapter. The need for the
special tvpe item in lieu of the general type item shall be justified
by' the agency/user in writing and the agency file documented for
public record.
Authority G.S. 143-52: 143-53: 143-55.
SECTION. 1300- SMALL PURCHASES
.1301 PROCEDURES (REPEALED)
Autliority G.S. 143-53.
.1303 DESIGNATION OF AUTHORIZED PERSONS
P e rsons authoriz e d to mak e purchas e s ar e to b e d e signated in
yvriting and b e h e l d pe r s o n ally liable for unauthoriz e d purchas e s
or improp e r pract i c e s.
Author it}- G.S. 143-53.
SECTION .1400 - WAIVER OF COMPETITION
.1401 POLICY
Under certain conditions, and othen\ ise if deemed to be in the
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public interest, competition may be waived. Conditions
permitting waiver includ'; but are not limited to cases where
performance or price competition are not available; where a
needed product or service is available from only one source of
supply; where emergency action is indicated; where competition
has been solicited but no satisfactory offers received; where
standardization or compatibility is the overriding consideration;
where a donation predicates the source of suppK; where
personal or particular professional services are required; where
a particular medical product or service, or prosthetic appliance
is needed; where a product or service is needed for the blind or
severely disabled and there are overriding considerations for its
use; where additional products or services are needed to
complete an ongoing job or task; where products are bought for
"over the counter" resale; where a particular product or service
is desired for educational, training, experimental. de\ elopmental
or research work; where equipment is alread\ installed,
connected and in service, and it is determined advantageous to
purchase it; where items are subject to rapid price tluctuation or
immediate acceptance; where there is evidence of resale price
maintenance or other control of prices, lawful or unlawful, or
collusion on the part of companies which thwarts normal
competitive procedures; where the amount of the purchase is too
small to justify soliciting competition or where a purchase is
being made and a satisfactory price is available from a previous
contract; where the requirement is for an authorized cooperative
project with another governmental unit(s) or a charitable
non-profit organization(s); where a used item(s) is available on
short notice and subject to prior sale.
Author in- G.S. 143-53.
.1402 APPROVAL AND DOCUMENTATION
Although competition rnay be waived for proper cause, its use
is required wherever practicabl e ; and furth e r, wh e r e practicable.
Where waiver is contemplated, e xc e pt for d e l e gat e d, sma l l, or
authoriz e d printing purchases, i t must b e e xplain e d i n writing to
th e Div i sion, agencies are authorized to negotiate with a
compan\(s) jn an effort to acquire the qualit\ of commoditN.
service or printing needed at the best possible price. deliver\'.
terms and conditions, when the expenditure js less than their
benchmark or delegation. A solicitation document requesting or
inviting an offer(s) shall be issued by the agencN; including
standard language, terms and conditions issued b\ the Division
of Purchase and Contract. Under an emergenc\ or pressing need
situation, a solicitation document requesting or inviting an
offer(s) shall be issued by the agenc\. including standard
language, terms and conditions issued by the Division, unless
circumstances prohibit their use. Negotiations may also be
conducted with a company! s) for contracts exceeding an
agency's benchmark or delegation, but are subject to the prior
approval of the Secretary, except where otherwise permitted by
rule.
Authority G.S. 143-53.
SECTION .1500 - MISCELLANEOUS
.1501 CONFIDENTIALITY
(a) Trade secrets which the offeror does not wish disclosed
shall be identified as follows: Each page shall be identified in
boldface at the top and bonom as "CONFIDENTIAL". Cost
information shall not be deemed confidential.
(b) To promote maximum competition and to protect the
public competitive procedure from being used to obtain
infonnation which would normally not be available otherwise,
the Division of Purchase and Contract agency which issued the
solicitation document may maintain the confidentiality of certain
types of infonnation. Such information includes trade secrets,
as detemiined by North Carolina law, and like information as the
SPG or the agency's executive officer or his designee may
determine to insure the integrity' of the public purchasing
process.
Trad e s e cr e ts which th e off e ror do e s not wish di s clos e d shall
b e id e ntifi e d as follows: Each pag e shall b e id e ntifi e d in
boldfac e at th e top and bottom as "CONFIDENTIAL". Cost
informat i on shall not be d ee m e d confid e nt i al.
Authority G.S. 143-52: 143-53.
.1505 FUNDS FROM DIFFERENT SOURCES
(a) All public funds irrespective of source, whether special,
federal, local, gifts, bequests, receipts, fees, etc., or state
appropriated, used for the purchase, rental, lease, installment
purchase and lease-purchases of e quipm e nt, mat e rials, s uppl ie s
commodities, printing and services are to be handled under the
provisions of Article 3 of G.S. 143 and in accordance with rules
adopted pursuant thereto by the Division of Purchase and
Contract.
(b) Community Coll e g e s and local e ducational adm i nistrative
unit s ar e not requir e d to us e th e Division of Purchas e and
Contract on r e ntal s , l e a se s and se rvic es . Rules applying to
sen ice, rental, lease, and printing contracts do not apply to local
school administrative units or community colleges.
Authority G.S. 143-53: 143-60(5).
1507 CHANGE IN CORPORATE STRUCTURE
In cases where contractors are involved in corporate
consolidations, acquisitions or mergers, the Division of Purchas e
and Contract agency which issued the solicitation document
resulting jn the contract may negotiate agreements for the
transfer of contractual obligations and the continuance of
contracts within the framework of the new corporate structures
but with the understanding that the state's contracts are not
instruments for sale and shall not be assigned.
Authority G.S. 143-53.
.1509 PURCHASING FROM OR THROUGH
AGENCY EMPLOYEES
Every reasonable effort shall be made to avoid making
purchases from or through employees of any agenc>. Prior
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PROPOSED RULES
written approxal from the S e cr e tary SPO is required in an\
instances which ma\ develop of doing business with such
personnel. In deciding whether to grant approval, the S e cr e tan.
SPO shall consider the t\pe item or service needed, the
prevailing market conditions, whether competition is available,
the cost invoked, and the effects of doing business with the
emplovee.
costs, the Division may offer its services, in addition to
purchasing and contracting, to non-state agencies with respect to ^L
preparation of specifications, contracts for services, inspection ^P
and testing of products, expediting deliveries and advising as to
market conditions.
Aulhorin- G.S. 143-49(6): 143-49.1: 143-51
Aiithonn- G.S. 143-33: 143-60(5).
.1510
USE OF PL RCHASING POWER FOR
PRIVATE GAIN
The purchasing pov\er of the state or the agency shall not be
used for private advantage or gain. Purchases under contracts
made by the sta t e , state or the agency, except those in
accordance with G.S. 143-58.1 shall not be allowed for personal
use out of private funds nor shall agencies place orders for
articles for ownership by employees or other individuals.
Aiitlmritr G.S. 143-53: I43-5.S.1.
.1511 ANTITRUST VIOLATIONS
In instances of identical offers or where there are otherwise
indications of collusion, awards may be made in a manner
intended to discourage or prevent its continuance as deemed to
represent the state's best interest. Instances of suspected
antitrust violation shall be reported to appropriate law
enforcement authorities by the SPO. agency which issued the
solicitation document. In submitting off e rs to th e Division, e ach Authorin- G.S. 143-49: 143-53: 1 43-60.
company must c e rtify und e r p e nalty of p e rjury that th e ir off e r
.1513 COOPERATIVE PURCHASING
Where an agency' is a participant in an authorized cooperative
project w ith another governmental activ ity or with a charitable
non-profit organization, goods and services necessary' to the
project shall be acquired according to thes e Rules; the rules of
this Chapter: provided, however, that if the interest of the State
would be better served by one of the following acquisition
methods, the SPO may do so with prior approval of th e
Secr e tary: authorize that acquisition method to be used:
(1 ) bv making acquisition on behalf of such governmental
activity or charitable non-profit organization; or
(2) by authorizing acquisition on the State's behalf under
the provisions of G.S. 143. Article 8: or
(3) by authorizing acquisition on the State's behalf under
the provisions of another State or another
governmental entity, provided due consideration is
given by the Se cr etary SPO to the differences in
purchasing rules, regulations and procedures (_ the
contractinn entity.
has been arriv e d at comp e titiv e ly and without collusion and that
th e y hav e not vio l at e d any f e d e ral or North Carolina antitrust
laws.
Aulhorin- G.S. 143-53: 143-54.
.1512 AVAILABILITY OF SERVICES TO
CERTAIN NON-STATE AGENCIES
(a) The Division of Purchase and Contract shall make
purchasing serv ices available to certain non-state agencies as
defined by G.S. 143-49 and I43-49.I. This may be affected by
budgetary allowances for personnel, time and related costs.
(b) Th e Division s hall inquir e p e riodically among non stat e
ag e nci e s to determin e th e typ e s of it e ms availabl e from stat e
t e rm contracts for wh i ch th e y would want the Division to
contract for th e m. B ased o n this infomiation. th e Division shall
d e v e lop an implem e nting sch e dul e of it e m s tog e th e r with th e
tim es for handling th e m and th e m e thods of purchasing or
contracting. Th e Divi s ion has Final d e cision as to it e ms included
on th e sch e dul e .
fe) (bj Where non-state agencies covered bv this provision
elects to participate in a contract, its resulting contractual duties,
obligations and responsibilities shall be the same as those
required for agencies. Non-state agencies covered by this
provision shall make payments to suppliers in a timely manner
and in accordance with the temis of the contracts.
fd^t£l As may be practicable in terms of personnel, time and
1517 GOODS REQUIRING IMMEDIATE
ACCEPTANCE
In th e purchas e of it e ms which ar e subj e ct to rapid pric e
fluctuation or imm e d i at e acc e ptanc e , th e SPO may award
contracts as deemed advi s a ble provi de d that e ach such action is
mad e a matt e r of r e cord and r e port e d promptly to th e Board of
Award and S e cr e tary.
Authority G.S. 143-52: 143-49.
1518 BOARD OF AWARD
(a) When the dollar value of a contract for the purchase,
lease, or lease purchase of e quipm e nt, mat e rials, and suppli e s
commodities or printin g exceeds the b e nchmark e stablish e d bv
G.S. 143 53.1. agency's benchmark or delegation, the Board of
Award (Board) shall canvass the Division's recommended
action. This also includes reporting of emergency and pressing
need purchases over the agency's benchmark or delegation. The
Division will submit the Board's recommendation (award,
cancellation, approval, negotiation, etc.) to the Secretary. The
Secretary may either concur w ith the recommendation of the
Board by awarding contracts or approving other recommended
action, or take other action as deemed necessary. A Board of
Award meeting is comprised of at least two voting members.
The SPO or designee conducts the meeting and one division
employee takes the minutes of the meeting. The Adv isory
Budget Commission mav designate tyvo or more v oting members
636
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PROPOSED RULES
(2)
(3)
to serve as members of the Board. The S e cr e tary SPO may
further designate the following persons who may serve in this
capacity in the absence of member(s) of the Commission:
(1) Assistant Superintendent for Financial Services,
Department of Public Instruction;
Representative from Attorney General's Office;
All Council of State members with the exception of
the Governor.
These alternate members shall not further delegate this
responsibility. The Board meets weekly.
(b) R e commendations for th e award of contracts shall b e
r e vi e w e d only b> th e Division of Purcha se and Contract, th e
Board, and the S e cr e tary ' . Records shall be kept of each meeting
and made public by the SPO unless the SPO determines a
specific record of the meeting needs to be confidential due to the
nature of the purchase (Ex: Law enforcement surveillance
equipment). The Secretar\ may elect to proceed with the award
of contracts without the recommendation of the Board in cases
of emergencies or in the event that a Board is not available. In
such cases, contracts awarded without Board review shall be
reported to a subsequent Board as a matter of record.
(c) Exemptions: Approval by the Board or Secretary is not
required for the following purchase actions: exemption by
statute, by rule, by Special Delegation, or where one agency is
buying fi-om another agency or through State or Federal Suiplus.
Aiithority'G.S. 143-53: 143-3 18. IN(IO).
.151- PROTEST PROCEDURES
A party wanting to prot es t a contract award hand le d by th e
Divis i on of Purchas e and Contract must submit a writt e n r e qu es t
for a prot es t m ee ting to th e SPO which must b e r e c e' v e d in th e
Division of Purcha se and Contract within 30 cons e cutiv e
cal e ndar days from th e date of th e prot es t e d contract award.
This l e tt e r must contain specific sound r e asons and any
supporting docum e ntation for wh\ the party i s prot e sting th e
award or th e prot e st will be prompt l y r e jected. If th e SPO can
r e nd e r a d e cision bas e d on th e facts without a me e ting, a wr i tten
r e sponse with a deci s ion will b e r e nd e r e d within 10 consecutiv e
cal e ndar day s of th e r e c e ipt of th e prot e st l e tt e r. If not. th e SPO
wil l schedule a m ee ting with th e prot e sting party to h e ar th e ir
complaint. — This m ee ting will b e h e ld within 30 cons e cutiv e
cal e ndar days aft e r r e c ei pt of th e writt e n prot e st. Th e SPO will
r e spond to th e prot e sting part) in writing with a d e cision within
30 cons e cut i v e cal e ndar days from th e dat e of th e prot e st
m e eting. All d e ci s ion s of th e SPO s hall b e th e final
administrativ e r e vi e w.
(a) To insure fairness to al] offerors and to promote open
competition, agencies and the Division of Purchase and Contract
shall actively follow-up and be consistent jn responding to an
offeror's protest over contract awards.
(b) This Rule applies only to contracts with an actual or
estimated dollar value over ten thousand dollars ($10.000). his
recommended that agencies establish procedures to handle an
offeror's concerns for contracts with less dollar value.
(c) When an offeror wants to protest a contract a\\ arded by an
agency over ten thousand dollars (SI 0.000). the agency and the
offeror shall comply with the following:
(1) The offeror shall submit a written request for a protest
meeting to the agency's executive officer which shall
be received by the agency's executive officer's office
within 30 consecutive calendar days from the date ot'
the contract award. The executive officer shall
furnish a copy of this letter to the SPO within five
consecutive calendar days of receipt. The offeror's
letter shall contain specific sound reasons and any
supporting documentation for why they have a
concern with the award. If the letter does not contain
this information, or ]f the executive ofUcer determines
that a meeting would serve no purpose, then he may,
within 10 consecutive calendar days from the date of
receipt of the letter, respond in writing to the offeror
and refuse the protest meeting request. A copy of the
executive officer's letter shall be forwarded to the
SPO.
(2) If the protest meeting is granted, the executive officer
shall attempt to schedule the meeting within 30
consecutive calendar days after receipt of the letter, or
as soon as possible thereafter. Within 10 consecutive
calendar days from the date of the protest meeting, the
executive officer shall respond to the offeror in
writing with his decision. A copy of the executive
officer's letter shall be forwarded to the SPO.
(3) The agency shall notilS' the SPO. m writing, ot" any
further administrative or judicial review of the
contract award.
(4) The executive officer may appoint a designee to act
on his behalf under this Rule.
(d) When an offeror wants to protest a contract awarded by
the Secretary over ten thousand dollars (SI 0,000), the SPO and
the offeror shall comply with the following:
( 1) The offeror shall submit a written request for a protest
meeting to the SPO which shall be received by the
Division within 30 consecutive calendar days from the
date of the contract award. The offeror's letter shall
contain specific sound reasons and any supporting
documentation for why they have a concern with the
award. If the letter does not contain this information.
or if the SPO determines that a meeting would serve
no purpose, then he may, within 10 consecutive
calendar days from the date of receipt of the letter,
respond in writing to the offeror and refuse the protest
meeting request.
(2) if the protest meeting ]s granted, the SPO shall
attempt to schedule the meeting within 30 consecutive
calendar days after receipt of the letter, or as soon as
possible thereafter. Within 10 consecutive calendar
days from the date of the protest meeting, the SPO
shall respond to the offeror jn writing with his
decision.
Authority G.S. I50B-2; 150B-22: I50B-23; 143-53.
.1520 DEFAULT PROCEEDINGS; DEBARMENT
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PROPOSED RULES
(a) Th e SPO. who ma\ consult with th e Board of Award. The
agenc\ which issued the solicitation document resuitina jn the
contract ma\ find a contractor in default of contract for failing
to perform in accordance with the contract requirements, terms
and conditions. If a contractor is found in default of contract,
the SPO. agenc\ which issued the solicitation document
resulting m the contract, may take action, immediate if
necessan. to purchase the needed products commodities,
printing or services on the open market and charge any
additional cost for the product commodity, printing or service
and expense for doing so to the defaulting contractor. (If th e r e
wa: . a p e rformance bond reqii i r e d of th e company as part of the
contract, it ma> b o r e d ee med with th e cash proce e ds going to th e
Stat e .) in addition, that company ma \ b o r e mov e d from all
mailing lists and d e barr e d from doing b u sine ss with an\ ag e ncy.
for a p e r i od of tim e at th e discr e tion of th e SPO. Jf an agenc\
finds a contractor in default, such action and the circumstances,
shall be reported by the agency to the Division of Purchase and
Contract jn \\riting. This does not limit an\ other remedies that
ma\ be available to the State or agencv.
(b) The Di\ ision mav remove the company from any mailing
lists which may be utilized and debar the company from doing
business with the agency, or any agency, for a period of time at
the discretion of the Division.
Authorin- G.S. 143-49: 143-52: 143-53: 143-60.
.1521 FAITHFUL PERFORMANCE
(a) A bond, or other suitable means of e nsuing insuring
faithful performance, may be required of the contractor at the
contractor's expense, e xp e ns e and in th e discr e tion of th e Stat e
Pu r chasing Offic e r.
(b) Liquidated damages, in the form of a monetary penalty for
late delivery, may be prov ided for in the contract, as a means of
insuring faithful performance from the contractor.
Commission; State Utilities Commission;
(8) services yvhich are merely incidental to the purchase ^
of supplies, materials or equipment such as V-
installation services;
(9) contracts for construction of and structural changes to
public buildings:
(10) personal services provided by' a professional
individual (person) on a temporary or occasional
basis, including (bv' way of illustration, not limitation)
those provided by a doctor, dentist, attorney, architect,
professional engineer, scientist or performer of the
fine artN and similar professions; the exemption
applies only if the individual is using his/her
professional skills to perfomi a professional task; a
personal sery ice may also be a consulting serv ice;
(11) services provided directly by an agency of the state,
federal or local government, or their employees when
perfonning the service as a part of their normal
governmental function.
Wh e r e Whether such purchases are made directly by using
ag e nci e s, the agency or by the Division, comp e tition is r e quir e d
wh e r e \ e r possibl o . unl e ss a small purchas e is being made, good
purchasing practices shall be followed.
(b) In addition to products and ser\ ices exempted by' Statute,
the SPO may exempt other products and services from purchase
through the Division provided that the SPO mi 'js findings:
( 1 ) that competition will not enhance the price that the
State yvould receive for the product or service; and |
(2) that competition y\ill not enhance the quality of the
product or service that the State would receive.
(c) Contracts for bakery products and dairy products shall be
ayvarded through the Division of Purchase and Contract, if over
the agency's expenditure benchmark.
Authorin- G.S. Z4-6(B): 143-53: 143-56: 143-62.
Authority G.S. 143-52: 143-53.
SECTION .1600 - EXEMPTIONS, EMERGENCIES,
AND GENERAL AND SPECIAL DELEGATIONS
.1601 EXEMPTIONS
(a) Except as provided in Paragraph (c) of this Rule, it is not
mandatory for the items and services listed in this Rule to be
purchased through the Division of Purchase and Contract.
(1) purchase of liquor:
(2) perishable articles such as fresh meats;
(3 ) published books, manuscripts, subscriptions to printed
material, packaged copyrighted softy\are products,
and like material;
(4) services provided by individuals bv direct
employment contracts y\ ith the state;
(5) public utility services (gas. ysater and electricity );
(6) telephone, telegraph and cable sery ices furnished by
those companies;
(7) services provided which are subject to published tariff
rates as established b\ the Int e rstate Comm e rc e
.1602 EMERGENCIES
(a) Th e SPO may mak e or authoriz e .An agency is authorized
to make purchases of commodities commodities, printing or
services in the open market in cases of emergency' or pressing
need. For this purpose, a pressing need is one arising from
unforeseen causes including but not limited to delay by'
contractors, delay in transportation, breakdoyvn in machinery, or
unanticipated volume of yvork; y\hile emergencies are defined
as situations yvhich endanger lives, property or the continuation
of a vital program and which can be rectified only by immediate
on-the-spot purchases or rental of e quipm e nt, suppli e s, mat e rials.
commodities, printing or services.
fb) — Wh e n circumstanc e s r e quire such action, and th e
e xp e nditur e is o\ e r th e ag e ncy "s benchmark establish e d by G.S.
1 4 3 53.1. v e rbal approval shall b e obtain e d from th e Division of
Purchase and Contract if tim e p e nnits. Subs e qu e ntly, wh e th e r
or not such prior approval vxas possible, an e xplanation of th e
e m e rg e ncy must b e r e port e d in writing to th e Division. — The
Division will r e port th e purchas e of e quipni e nt. mat e rials and
supplies commoditi e s and printing to the Board as a matt e r of
r e cord.
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NORTH CAROLINA REGISTER
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PROPOSED RULES
(b) Aoencies are authorized to negotiate v\ ith a compan\(s) in
an effort to acquire the quaiitt of commodits. ser\'ice or printing
needed at the best possible price. deli\er\. terms and conditions.
A soh'citation document requesting or inviting an offer(s) shall
be issued, including standard language, terms and conditions
issued by the Division of Purchase and Contract, unless
circumstances prohibit their use.
(c) When emergenc\ or pressing need action is necessary, and
the expenditure js over the agency's benchmark or delegation,
prior verbal appro\al shall be obtained from the Division if time
permits. Subsequently, whether or not such prior appro\al was
possible, if the expenditure is o\er the agency's benchmark or
delegation, an explanation of the emergency or pressing need
purchase shall be reported in writing to the Di\ision. The
Division shall report such purchases of commodities and
printing to the Board as a matter of record.
Auihorin- U.S. 143-53: 143-5': 143-60.
.1603 SPECIAL DELEGATIONS
(a) The SPO may authorize, by special delegation, any agency
to purchase specific it e ms and quantities, commodities, printing
or services without limitation as to expenditure. Such delegation
is normally confined, but not limited to. it e ms and quant i ti e s.
commodities, printing or services which by their nature or
circumstance, such as perishableness. transportation costs, local
conditions or local availability, would result in handling by the
Division of Purchase and Contract serving no practical purpose.
Ey ery such delegation shall be ir isriting and made a matter of
record.
(b) The SPO may require that offers received under such
delegations be sent to the Division for determination of the
successful company.
(c) The Division of Purchas e and Contract shall periodically
review its special delegations of purchase to ascertain the
ayailability of these supp l i e s, materials, equipment commodities,
printing or services and their continued suitability for delegation.
Authority- G.S. 143-53.
.1604 GENERAL DELEGATIONS
The general purchasing delegation for agencies (except the
universities) shall be not more than ten thousand dollars
(SIO.OOO). The SPO may loy\er or raise this general delegation
for a specific agency, up to the amount established by G.S. 143-
53.1. after consultation with the State Budg et Officer and the
State Auditor for State agencies, and upon consideration of the
agency 's (except the universities) overall capabilities, including
staff resources, organizational structure, training, purchasing
compliance reviews, electronic communication capabilities, and
audit reports. If an agency \vishes to obtain an increase in their
general delegation, they shall submit a request in yvriting.
outlining their overall capabilities, to tlie SPO for his
consideration.
.1605 COMPLIANCE REVIEWS
(a) The Di' ision of Purchase and Contract shall conduct
compliance re\ lews on purchasing practices at all agencies. The
purpose of tlie compliance reviews shall be for determining if
agencies are complying with North Carolina's purchasing
statutes and rules adopted thereunder, and whether they should
continue having the same level of delegation, have it reduced, or
do they quality for an increase. A copy of the compliance report
shall be provided to tlie agency's executive officer, the State
Auditor, the State Budget Officer, the local school
administrative unit's Board, any of which are applicable.
(b) The Division's staff shall have the authorit\ to enter the
premises and obtain an agency's purchasing records for the
purpose of tlie compliance review the agency shall cooperate
w ith the Division's staff, prov iding them with requested records,
adequate office space for conducting the review, and agency
purchasing staff for discussion ot' purchase transactions. The
Division shall not unnecessarily require of the agency anv more
than is needed to complete the review.
(c) The SPO shall have the authority to lovser. or raise if
requested, an agency's (excluding the universities) general
delegation, if tfie results of a compliance review by the
compliance staff of tfie Division, merits such action as
determined bv the SPO. The SPO mav low er the delegation to
any level, including the complete removal of tlie delegation,
depending on the nature of anv v iolations found. The SPO shall
report to tlie University's Board of Governors the results of any
compliance review conducted at the universities, and shall
prov ide to them his recommendation, based on those results, on
what that university's benchmark should be.
(d) The SPO shall prov ide to agencies, upon request, the
Division's asnstance in educational training for an agency's
staff to better acquaint them with the purchasing statutes and
rules.
Aialiorit}' G.S. 143-53.
SECTION .1900 - RECORDS AND FILES
1901 RECORD MAINTENANCE
Except where State law provides to the contrary, after the
award of a contract, the records of the Division an agency are
public documents. Purchase files shall be maintained for a
period of five years after the expiration date of the contract.
AuthorityG.S. I43B-I0(fi: 143-53.
.1903 FILES
(a) Each r e quisition r e c e iv e d bv th e Division of Purchas e and
Contract shall b e a s sign e d a uniqu e , s e qu e ntial control numb e r
and plac e d in a pr e numb e r e d fold e r. Thi s numb e r shall th e n
b e com e th e fil e numb e r for th e r e quisition and s ubs e qu e nt
docum e nts i s su e d by th e D i vision. Each contract file shall be
identified individually so rt can be readily located and
referenced.
Auihoritv G.S. 143-53.
(b) Th e fil e s hall includ e th e r e quisition, worksh ee t, mailing
J3:8
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639
PROPOSED RULES
Wst; — off e r s . — tabulation. — r e lat e d — corr e spond e nc e . — and — the 19. 1998 at the Moore Hall Auditorium. iiUversii}- of .\orth
Carolina at Pembroke. Pembroke. NC.
Reason for Proposed Action: /;; the United States. Indian
tribes have had special relationships with state and federal
governments. State recognition is the state government's
acknowledgment of an interrelated Indian people's historic
existence as a tribe. Identified as a separate and distinct group,
exercising social, political, or economic influence over its
people. Tribal representatives have expressed the concern that
official recognition of mere "organizations " threatens tribal
status and sovereignty' as they presently exist.
Comment Procedures: .411 written comments should be made
to Gregory .4. Richardson. Executive Director of the North
Carolina State Commission of Indian .Affairs, at the Commission
offices. 2r West Jones Street. Raleigh. NC 27603-1336.
Telephone (919) '33-3998. E-mail
Gregory _Rlchardson amall.doa.state.nc.us. .411 written
comments must be received by Mr Richardson no later than
5:00 p.m. EST on November 18. 1998.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic Imp '■ct of at least five million
dollars I S 5. 000.000) In a 12-month viod.
CHAPTER 15 - COMMISSION OF INDIAN AFFAIRS
c e rtificatio n o f award to th e succ e s s ful contractor. All purchase
transactions shall be documented. As applicable, each file shall
include:
( 1 ) Original offers if in uritini;. or written documentation
of verbal offers received.
(2) Reasons for award or cancellation:
(3) Worksheets evaluations:
(4) Mailinu list, if used:
(21 Written justification for waiver or emeraencv
purchase:
Tabulation of offers received:
Copy of purchase order(s):
Related correspondence:
Reason(s) for receivina onlv one offer in response to
a solicitation:
Negotiated contracts: and
Reasons for not accepting technical proposals.
(c) After award of contract all material in the file, except
confidential information, shall be open to interested persons
during normal office hours, may be hand copied, or copies v\ ill
be furnished, furnished in accordance with the Public Records
Act.
.Authority G.S. 143B-I0lf: 143-53.
.1906 APPLICATIONS FOR ADDITION TO
MAILING LIST (REPEALED)
L6)
01
18]
LO)
11
.4uthorltyG.S. 1438-10(0-
1907 TERM CONTRACTS
A copy of e ach curr e nt and e xpir e d t e rm contract ma> b e s ee n
upon r e qu e st if still r e tained in th e Division of Purchas e and
Contract or th e Stat e R e cords C e nt e r.
.4uthorit}G.S I43B-I0(f.
.1909 CANVASSING BID FILES
A s ummapi of actions t a k e n in canvassing bids and awarding
contract s ma> be s ee n upon r e qu e st, if still r e tained in the
Division of Purcha se and Contract or th e State R e cords C e nt e r.
SECTION .0200 - LEGAL RECOGNITION OF
INDIAN GROUPS
.0202 ORGANIZATIONAL ASSISTANCE
It is a legislative requirement for the Commission to assist a
local group to organize and achieve recognition.
When a group of Indians has identified themselves thev'
should request organizational assistance from the Commission.
The Commission will then explain organizational options to this
group and assist them in developing a representative tribal
organization.
.4uthorltvG.S. 143B-406.
.4uthorit\- G.S. 143B-I()(f).
ww«www«w
Notice is hereby given In accordance with G.S. 150B-2I.2
that the NC State Commission of Indian .4ffairs intends to
amend rules cited as 1 NC.4C 15 .0202 - .0204. .020' - .0209.
.0211. .0214: and repeal rule cited as I NC4C 15 .0210. Notice
of Rule-making Proceedings was published in the Register on
July 15. 1998.
Proposed Effective Date: .4pril 1. 1999
.\ Public Heanno\[ ill be conducted at 10:00 a.m. on November
.0203 TRIBAL ORGANIZATIONAL OPTIONS
(a) Each group seekin g recognition shall organize itself as an
Indian tribe, as defined in 1 NCAC 15 .0208. and shall meet the
criteria set out in 1 NCAC 15 .0209 and .0211. Methods of
tribal organization acceptable — 10 recommended by the
Commission are:
( 1 ) to organize a priv ate nonprofit corporation under the
laws of North Carolina, or
(2) to organize a tribal council council.
(b) ' '*n^ recognized by tfie Commission, the tribal
organizai! .n te may represent the group both locallv and at the
Commission level.
(c) The type of tribal organization is to be representative and
give opportunitv for all Indians in the area to be represented.
640
NORTH CAROLINA REGISTER
October 75. I99S
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PROPOSED RULES
When more than one group is involved, opportunity shall be
given for all areas to be represented on either the tribal board of
directors or the tribal council.
Aiahorin-G.S. 1438-406.
.0204 PETITION FOR RECOGNITION
Once an acceptable method of tribal organization has been
achieved the group ma\ petition the Commission for recognition.
The petition shall include name, number, location, origin and
existing recognition.
Authority G.S. 143B-406.
.0207 PROCEDURE FOR RECOGNITION
The procedure to be followed for recognition will be:
( 1 ) Petitioner (trib e or organ i zation) subinits a petition as
set out in Rule .0204 of this Section to the
Commission of Indian Affairs;
(2) Commission certifies receipt and explains procedure
to petitioner:
(3) With assistance from the Commission, petitioner
prepares a full application (may take up to one year),
which is sent to the special committee on recognition;
(4) Hearing before the special committee on recognition;
(5) Decision is rendered b\ special committee on
recognition;
(6) If petitioner is not satisfied with the decision of the
special committee on recognition, an appeal ma\ b
taken to the full Commission;
(7) The decision by the full Commission will be rendered
by at least a two-thirds majority' of Indian members;
(8) If requested, an infomial hearing will be held before
the full Commission; Th e proc e dur e as s e t out in
S e ctions .0600 and .0700 of this Chapt e r wi l l b e
follow e d;
(9) If the decision is for recognition, the trib e or group is
recognized as an Indian tribe by the state. If the
decision is against recognition, petitioner may apply
to the Office of Administrative Hearings for a formal
hearing pursuant to G.S. I50B-23.
Authority G.S. 1438-406: 1508-23.
.0208 TRIBAL DEFINITION
A petitioner may appK to be recognized onl\ as an "Indian
tribe", defined as on e of th e followina:
(4-) "Indian tribe" is a population of Indian people all
related to one another by blood, tracing their heritage
to Indians Indian tribes indigenous to North Carolina
within the last 200 years.
f2^ "Indian organizat i on or group" i s a population of
Indian p e opl e made up of m e mb e rs of s tat e or
f e d e rally r e cogniz e d Indian trib e s. Nin e ty p e rc e nt of
th e organization or group must b e Indian.
Authority G.S. 1438-406.
.0209 CRITERIA FOR RECOGNITION AS A TRIBE
(a) The criteria to be used in the decision whether to extend
official state recognition as a tribe are:
( 1 ) traditional North Carolina Indian names;
(2) kinship relationships with other recognized Indian
tribes;
(3) official records such as birth, church, school or other
recognizing the people as Indian;
(4) letters or statements from state or federal authorities
recognizing the people as Indian;
(5) anthropological or historical accounts tied to the
trib es ' group's Indian ancestry;
(6) letters or statements from presently recognized tribes
or groups or their representatives attesting to the
Indian heritage of the trib e ; group;
(7) any other documented traditions, customs, legends,
etc. that signity the trib e s' group's Indian heritage;
(8) participation in or grants from sources or programs
designated as for Indian only.
(b) In addition to the criteria listed in Paragraph (a) of this
Rule, the following are also relevant to the decision:
( 1 ) any other material or documents the trib e group may
v\ ish to present;
(2) any other material or documents the Commission or
special committee on recognition may request.
(c) Five of the recognition criteria listed in Paragraph (a) of
this Rule must be satisfactorily met to achieve state recognition.
Author in- G.S 1438-406.
.0210 CRITERIA FOR RECOGNIT'ON AS A GROUP
OR ORGANIZATION
(fl-) To b e r e cogn i z e d as an — Indian group or Indian
organization, th e p e tition e r must s how that at l e ast 00 p e rc e nt of
th e ir r e gist e r e d m e mb e rs ar e c e rtifi e d m e mb e r s of r e cogniz e d
stat e or f e d e ral tr i b es . Th e r e main i ng up to 10 p e rc e nt may b e
e ith e r m e mb e rs of un r e cogniz e d trib es or non Indians.
fh) — Inquir i es wi l l be mad e w i th th e nam e d trib e s as to th e
tribal s tatus of the memb e rs list e d.
.Authority G.S. 1438-406.
.0211 RECOGNITION REQUIREMENT
Only trib e s groups tracing back to Indian tribes indigenous to
North Carolina at least for the last 200 years will be considered
for recognition by the Commission.
.Authority G.S. 1438-406.
.0214 TRIBAL ROLL
Each petitioning trib e or organization group must submit to
the Commission a roll of its members as a condition to
recognition. The tribal roll should list the names and addresses
of the people and relate each one to their kinship ties. Fer
organizations, th e roll should list th e nam e s and addr e ss e s of al l
m e mb e rs and if Indian, th e r e cogniz e d tribe to which th e p e rson
13:8
NORTH CAROLINA REGISTER
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641
PROPOSED RULES
belong s . Th e se rolls This roll must be submitted prior to the
recognition decision of the Commission of Indian Affairs.
AuthoniYGS. 1438-406.
« w w w w w
w w « w
Notice is hereby given in accordance with G.S. I5QB-21.2
tlhii the Department of Administration intends to amend
rules cited as 1 \CAC 25 .021! - .0213. .0301 - .0303. .0402.
.0504 - .0506. .0602 - .0603. .0605. Notice of Rule-making
Proceedings Mas published in the Register on June 1, 1998.
Proposed Effective Date: April 1. 1999
A Public Hearing will be conducted at 10:00 a.m. on Xovember
9. 199H at the Administration Building. .4dvisory Budget
Commission Room 5034. 116 West Jones Street. Raleigh. AC
2-603.
Reason for Proposed .Action: The Departments of
Administration and Environment and Natural Resources, in
conjunction with representatives of local and State government
and environmental interests, convened the Environmental Policy
Act Aih-isoiy Committee ("EPAAC") to study the North Carolina
Environmental Policy Act and to recommend means to make the
act's implementation more efficient and responsive. These
amendments are a part ofEPA.AC's recommendations.
Comment Procedures: All written comments should be made
to CIvys Baggett. Director State Clearinghouse. 116 West
Jones Street. Administration Building. Room 5106B. Raleigh.
NC 2^603-8003. telephone (919) '3 3-' 2 32. e-inail
chiys_baggett a mail. doa. state, nc. us.
Fiscal Note: These Rules do not affect the expenditures or
re\-emies of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S5. 000. 000) in a 1 2 -month period
CHAPTER 25 - NORTH CAROLINA
ENVIRONMENTAL POLICY ACT
SECTION .0200 - NCEPA
ADMINISTRATION/ENVIRONMENTAL IMPACT
.0211 ST.ATE CLEARINGHOUSE
(a) The Department of Administration shall maintain a
clearinghouse to coordinate and administer the requirements of
this Chapter
(b) Among its responsibilities the Clearinghouse shall:
recei\e and circulate en\ironmental documents for
re\ ieu and comment as pro\ ided b\ these Rules:
forward all written comments generated b\ the re\ iew
process to the State Project .Agencx and. where
appropriate, prepare a single integrated letter of
response;
(1)
(2)
(3) retain a complete record of en\ ironmentai documents.
re\iew documents, and other substanti\e materials
related to the operation of the Clearinghouse;
(4) train review coordinators from within all state
agencies; and
(5) coordinate the establishment of minimum criteria and
ensure that thresholds are consistent among all
agencies.
Authorities. 113.4-11.
.0212 ENVIRONMENTAL BULLETIN
(a) The Environmental Bulletin will be published twice a
month b> the Clearinghouse and will contain notice of an\ filing
with the Department of an\ en\ ironmentai document, request for
establishment of minimum criteria, or other documents and
decisions as set out b\ this Chapter
(b) The Environmental Bulletin shall be made available to all
review agencies and v\ill be available to local governments,
institutions, and individuals upon request.
(c) The Environmental Bulletin is available on the Internet at
vvwAv.doa. state. nc. us doa clearing ebnet.htm. Notices of
Availability of documents received for review and comment are
added dailv to the Environmental Bulletin at this vsebsite.
Authorit^•G.S. 113A-1 t, lugh 113A-I0.
.0213 ENVIRONMENTAL POLICY ACT ADVISORY
COMMITTEE
(a) The Secretan. of the Department of Administration or a
person so designated bv the Secretary, shall sene as the Chair of
the Environmental Policv' Act Adv ison. Committee.
(b) The purpose of the Committee is to provide technical
advice to the Secretary of the Department on env ironmentai
issues related to the NCEPA.
(c) The Secretary will solicit nominations for the Committee
from those state departments and other organizations most
involved in env ironmentai protection. These include but are not
limited to. the Departments of Cultural Resources. Health and
Human R e sourc e s. Services. Environm e nt. H e alth. Environment
and Natural Resources. Justice, and Transportation. From the
list of nominees, the Secretary shall select the Committee
members. The Committee shall consist of no less than ftve
seven or more than ftifH; f3 members.
Authority- G.S. 113.4-11.
SECTION .0300 - MINIMUM CRITERIA
.0301 MINIMUM CRITERIA
(a) State agencies may choose to establish specific minimum
criteria designating minimum levels of env ironmentai impact.
Once these criteria have been approved, no filing of
env ironmentai documents will be required for projects v\hose
impacts do not exceed the criteria thresholds.
IJ3J If an agency establishes minimum criteria, the agencv will
review the criteria every five years and revise them as necessary .
642
NORTH CAROLINA REGISTER
October 75. J 998
13:8
PROPOSED RULES
(c) All proposed minimum criteria and revisions to minimum
criteria shall be approved b\ the Secretars of Administration
prior to an agency's submission of proposed rules establishing or
revising such minimum criteria under G.S. 15QB.
AiithorinG.S. II3A-II.
.0302 APPROVAL OF CRITERIA
The following procedures will be used in th e e stablishm e nt to
gain approval of minimum criteria:
( 1 ) The agency will prepare a draft list of the minimum
criteria, describing the ease of measuring the criteria,
and how the criteria predict the en\ ironmental impact
of projects. The agency will submit these lists to the
Clearinghouse for circulation and re\ iew.
(2 ) Upon receipt of these lists from the agency, the The
Clearinghouse wiH will:
(a) solicit v\ritten comments on the criteria from
interested parties or agencies ha\ ing expertise
or jurisdiction by law, and will publish a notice
of the criteria in the Environmental Bulletin.
The period of review is 30 working calendar
days from the date of publication in the
Environmental Bull e tin. Bulletin: and
(b) re\ iew the criteria to ensure the\ are consistent
with Department of Administration rules and
make any necessars recommendations to the
agency as to consistency.
(3) Th e Cl e aringhous e v\ ill foryvard all comm e nts on th e
criteria to the submitting ag»- ' ncy. In addition-
Clearinghouse staff yv ill r e vi e yv th e crit e ria to e nsur e
con s ist e nt thr e shold s among ag e nci es and mak e an\
n e c e s s ar> r e comm e ndat i ons, ff there are no yvritten
comments and the criteria are consistent y\ith
Department of Administration rules, the criteria will
be approved by the Secretary ot" Administration .
(4) If th e r e ar e no comm e nt s , the crit e ria wi l l b e approv e d
by th e S e cr e tary of Administration, ff there are anv
written comments on the criteria, the Clearinghouse
will forward all those received to the submitting
agency. along with any Clearinghouse
recommendations as to consistency.
(5) TTie agency will feview consider all written comments
and decide whether to submit a fifta4 revised list of
minimum criteria to the Cl e aringhous e . Clearinghouse
or whether to continue with its original list.
(a) If the agency submits a revised list, the new list
of criteria will follovy the same procedure for
solicitation of comments, publication of notice,
and consistency review as did the original list.
This process will be continued until the agency
decides it no longer wishes to make further
amendments to its proposed criteria, or until no
further written comment is received.
(b) if the agency decides to continue with jts
original list or no longer wishes to amend jts
list as provided for m Rule .0302(5)(a) of this
Section, it will notify' the Clearinghouse of that
decision.
(6) The Clearinghouse will recommend to the Secretary
of Administration approval or rejection of the final
list of minimum criteria based on the consideration of
all comments, written comments and the criteria's
consistency.
(7) Minimum crit e ria shall b e revi e wed e v e ry fiv e y e ars
and r e vis e d as n e c e s s ary. The Clearinghouse will
notify the agency of the Secretary's approval or
rejection of its proposed final list of minimum criteria.
Authority G.S. 115.4-11.
.0303 REVISION OF CRITERIA
The same process as cited in Rule .0302 of this Section for
initial adoption of minimum criteria will be followed by agencies
seeking to revise th e ir those minimum crit e ria as is us e d in th e
initial adoption, criteria.
.Authority G.S. 113.4-1 through 113.4-10.
SECTION .0400 - COMPLIANCE
.0402 DOCUMENT UNDER NEPA DEEMED
ADEQUATE
If an env ironmental document is prepared under the provisions
of the National Environmental Policy Act (NEPA) for a specific
activity, and if that, document is reviewed through the
Clearinghouse process, then this review shall constitute
compliance with the requirements of this Chapter for that
activity, ff a specific activity has been designated as
categorically excluded from the provisions of the National
Environmental Policy Act, then the requirements of this Chapter
shall have been met for that activity.
Authority G.S. 113A-I through 113.4-10.
SECTION .0500 - ENVIRONMENTAL ASSESSMENT
.0504 INTERNAL REVIEW
(a) Once an EA is prepared, the State Project Agency must
decide if it is satisfied as to the completeness of its assessment.
If no significant environmental impacts are predicted, the agency
may then submit both the EA and FONSl to the Clearinghouse
for review.
(b) The agency mav choose to submit only the EA and use the
comments, if anv. to determine how to proceed. If an agency
chooses this procedure, the review process for the EA shall be
the same as Rule .0506 of this Section for both r e vi e ws, review
of an EA or a FONSl. If an agency proceeds y\ith an
Environmental Impact Statement, then the review process shall
be the same as that in Section .0600 of this Chapter.
Authority G.S. 113.4-11.
.0505 CONTENT OF FONSl
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NORTH CAROLINA REGISTER
October 15, 1998
643
PROPOSED RULES
A FONSl shall contain the following information:
( 1 ) a brief nan-ati\e description of the proposed activit>'
including a description of the area affected by the
proposed act ivit> acti\it\ and a site location map.
w here appropriate:
(2) a list of probable en\ironmental impacts of the
proposed activit\:
(3) a list of the reason(s) for concluding that the action
will not ha\e a significant adverse effect on the
qualit> of the en\ironment. with reference to any
mitigation acti\ ities to be carried out. thereb\ negating
the necessit\ of preparation of an EIS;
(4) a statement that no EIS is to be prepared and that the
FONSl completes the en\ ironmental re\ iew record
which is available for inspection at the Clearinghouse.
Aiahorih-G.S. lBA-11.
.0506 REMEW PROCESS
(a) The State Project Agenc_\ must submit 16 copies of the
EA and FONSl to the Cl e aringhous e . Clearinghouse, and any
additional copies as may be requested. The Clearinghouse will
circulate these documents to state and local officials to obtain
comments and will publish a Notice of Availability in the
Environmental Bulletin. In order to h ave a Notice of
Availabilit^ published in the Environmental Bulletin, the
documents must be submitted to the Clearinghouse no later than
noon on the Friday preceding the publication date of the
Bulletin. Reading copies will be made available at the
Clearinghouse for anv interested parties. The review period is
30 vsorking calendar davs after publication in the bull e tin.
Bulletin.
(b) Each rev lew ing agencv and an\ interested parrv ma> make
comments on the adequacy of the documents.
(c) Based on consideration of the comments submitted, the
Clearinghouse w ill advise the state project agencv as follow s:
( 1 ) the document has been determined to lack sufficient
information. Supplemental documentation which
provides adequate information should be submitted to
the Clearinghouse for review and comment;
(2) the document does not satisfy a finding of no
significant impact and an EIS should be prepared;
(3) the document is adequate and the next appropriate
lev el document should be prepared for rev lew ; or
(4) the document is adequate and completes the review
process requirements for the act.
(d) The State Project Agencv mav adopt or reject the
Clearinghouse's recommendation.
(e) No administrative or judicial review is permitted unless
undertaken in connection with review of the agencv action. No
other rev lew of an env ironmental document is pemiirted.
Auihority G.S. 113A-11.
SECTION .0600 - ENVIRONMENTAL IMPACT
ST.^TEMENTS
.0602 SCOPING
If an agency determines that an EIS is required on a project, i
it mav choose to request advice from the general public and '
other agencies on what alternatives and issues should be
addressed in the EIS. The agencv ma^ — r e quest — the
Cl e aringhouse to must submit a copy of a scoping notice to the
Clearinghouse, which will publish a tfie scoping notice in the
Environmental Bulletin. The comment period js 30 calendar
days after publication in the Bulletin.
Auihority G.S. 113.4-1 through 115A-10.
.0603 FORMAT AND CONTENT
Agencies shall use a fonnat for EIS's which will encourage
good analysis and clear presentation of all alternatives, including
the proposed activ itv while minimizing length and complexity.
These documents shall not exceed 60 pages and shall include 8
'2" X JJ_^ site location maps. The document shall include the
following:
(1) A single cover sheet including the following
information:
(a) designation of the document as a draft,
supplementary or final statement;
(b) title of the proposed activ ity that is the subject
of the statement;
(c; list of any involved cooperating agencies; and
(d) name, address, and telephone number of the ^
person in the State Project Agencv who can §
supply further information.
(2) An accurate summary of the statement stressing the
major conclusions, areas of controversy-, and issues to
be resolved. The summary shall also list all federal,
state, and local permits, licenses, certifications, and
other approvals which must be obtained in
implementing the proposal. If there is anv uncertainty
about whether any one of these is necessary, it should
be so indicated.
(3) Purpose and Need. The underlying purpose and need
being responded to by- the proposed activ ity.
(4) Alternatives including proposed activ itv. Based upon
information and analysis presented in Items (5)
through (8) of this Rule on the affected environment
and environmental consequences, the agency shall
present the env ironmental impacts of the alternatives
including the proposed activity- in comparative form.
To the extent possible the comparison of alternatives
shall quantity how the purpose and need v\ould be
satisfied bv each alternative and the proposed activ ity .
This section of the document is the heart of the EIS.
sharply defining the issues and providing a clear basis
for choice among options by decision makers and the
public. It shall also:
(a) explore and evaluate all reasonable
alternatives, including those not within the |
jurisdiction of the State Project Agencv and the
alternative of no action:
(b) discuss the reasons for the elimination of
644
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
alternatives from detailed study;
(c) identify the agency's preferred altemative(s) in
the draft statement and identify such
alternatives in the final statement, unless
another law prohibits the expression of such a
preference:
(d) include appropriate mitigation measures not
already included in the alternatives; and
(e) assess the social and economic impacts of each
alternative. Impacts shall be quantified for
each alternative, where feasible, but when
quantification b\ standard economic tools is
not feasible or intangibles are involved, a
description of each impact is required.
(5) Affected Environment. The EIS must describe the
environment of the area(s) to be affected and the
environment to be created b\ the alternatives under
consideration. The description shall be no longer than
is necessar\ to understand the effects of the
alternatives. Data and analysis in a statement shall be
commensurate with the importance of the impact, with
less important material summarized, consolidated, or
simply referenced.
(6) Environmental Consequences. This section of the
document forms the scientific and anal\1ic basis for
the comparisons under Item (4) of this Rule. It
includes:
(a) direct effects and significance;
indirect effects and significance;
cumulative effects and significance;
the relationship between the short-term uses of
the environment involved in the proposed
action and the maintenance and enhancement
of long-term productivity ;
any irreversible and irretrievable environmental
changes which would be in\olved in the
proposed action should it be implemented; and
possible conflicts between the proposed
acti\ities and the objectives of federal, state,
and local plans, policies, and controls for the
affected area.
(7) List of Preparers. The EIS shall list the names and
qualifications of the persons who were primarily
responsible for preparing the EIS.
(8) Appendi.x. If an appendix is included in an EIS. it
shall meet the follow ing requirements:
(a) consist of materials substantiating an\ anaKsis
fundamental to the principal document, as
distinct from material of lesser significance that
ma\ accompany the document or be
incorporated by reference;
(b) normally be analytic and relevant to the
decision to be made;
(c) not be counted in the EIS 60 page limit; and
(d) be circulated with the EIS or be readily
available upon request.
(b)
(c)
(d)
(e)
(f)
Authority (J. S. 113.4-11.
.0605 REVIEW PROCESS
(a) Draft EIS. This document Sixteen copies and any
additional copies as may be requested shall be submitted by the
State Project Agency and circulated for comment by the
Clearinghouse as set out in Rule .0506 of this Chapter A Notice
of th e availabilify Availabilit\- of the EIS shall be printed in the
Environmental Bulletin, and a 45 calendar-day period of review
after this notice is published shall be allowed.
(b) The Clearinghouse will forward copies of all comments
made b\ reviewers to the State Project Agency for incorporation
in the final document.
(c) Final EIS. The State Project Agenc> shall submit 16
copies of the final EIS and anv additional copies as may be
requested to the Clearinghouse. These documents shall be
circulated to the original reviewers for a final review. Notice
shall also be given in the Environmental Bulletin. Thirty
calendar days after publication of the bull e tin Bulletin shall be
allowed for final review.
(d) Based on consideration of the comments submitted, the
Clearinghouse will advise the state project agency as follows:
(1 ) the document has been determined to lack sufficient
information. Supplemental documentation which
provides adequate infomiation should be submitted to
the Clearinghouse for review and comment;
(2) a final EIS should be prepared for review addressing
the comments submitted; or
(3) the document is adequate and complete;- the review
process requirements for the act.
(e) The State Project Agency may adopt or reject the
Clearinghouse's recommendation.
if) No administrative or Judicial review is permitted unless
undertaken in connection with review of the agency action. No
other review of an environmental document is permitted.
.AuthormG.S. 113.4-11.
Notice is hereby given in accordance with G.S. 150B-21.2
that the State Building Commission intends to amend rule
cited as 1 NCAC 30F .0305. Notice of Rule-making
Proceedings was published in the Register on August 14. 1998.
Proposed Effective Date: April 1. 1999
A Public Hearing will he conducted at 10:00 a.m. on November
1 ". 1 998 at the Education Building. State Construction Office.
Suite -450. 301 North liilmington Street. Raleigh. NC 27603.
Reason for Proposed Action: This proposal was requested by
members of the State Building Commission who had expressed
concern that the present rules have no intermediate action in
cases where some doubts are raised in the contractor evaluation
process. This proposal allows the Commission to provide a
13:8
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October 15, 1998
645
PROPOSED RULES
warning to the contractor rather than Jiscjualif}' the contractor
whatsoever. Under the present procedures, if the panel finds
thai the contractor should be removed from pre-hid
disqualification, the records are purged and the contractor
starts out with a new record. Under the proposed revision, the
records would he retained.
Comment Procedures: All written comments should he made
to Dan R. Murray. State Construction Office. 301 North
Wilmington Street. Education Building. Suite 450. Raleigh, NC
2''601-282', telephone 1919) ~33-'962. e-mail
Dan_Murray a i7iail.doa.state.nc.us.
Fiscal Note: This Rule does not affect the expenditures or
revenues of state or local government funds. This Rule does not
have a substantial economic impact of at least five million
dollars (35.000.(100) in a 12-month period.
CHAPTER 30 - STATE CONSTRUCTION
SUBCHAPTER 30F - STATE BUILDING
COMMISSION CONTRACTOR EVALUATION
PROCEDURES
SECTION .0300 - EVALUATION OF CONTRACTORS
.0305 EVALUATION REVIEW
(a) SCO will be responsible for maintaining contractor
evaluation data. This data shall be maintained on an indi\ idual
Job basis, and shall also be maintained cumulativelv b\
contractor (based on contractor license number).
(b) The data maintained b\ the SCO will reflect perfonnance
histor} for a period of tl\e \ears. All evaluation data on
completed projects over five \ears old will be removed from
SCO tiles and will not be used as a factor in the cumulati\e
evaluation.
(c) A contractor's contractor whose cumulati\e evaluation
which falls below a mark of 3.5 will be detennined to have
provided an unsatisfactory level of performance and ma\ not be
allowed to bid on or ser\e as a sub-contractor on State capital
improvement projects during a corrective period. All references
to pre-bid disqualification status in this Section shall also be
considered to appK to disqualification of a prime contractor to
serve as a sub-contractor on State capital improvement projects
during the disqualification period.
(d) To be utilized for pre-bid disqualification, a prime
contractor's cumulative evaluation must be based on a minimum
of three evaluations on at least three separate capital projects.
Further, if a contractor is assigned a single final evaluation of
2.5 or lower, this action alone shall be sufficient to call the
contractor's performance into question r e sulting and ma\ result
in pre-bid disqualification during a corrective period.
(e) In both instances, i.e.. a cumulative mark falling below 3.5
or a single evaluation of 2.5 or lower, the SCO shall convene a
panel of five persons to review the evaluation and mad e make a
recommendation to the &&€ — for disqualification — of the
contractor for bidding. SBC. (A single final evaluation of 2.5 or
lower, when applied to the cumulative total, will not initiate
further immediate review |f ]t causes the cumulative rating to fall
below 3.5.) The panel shall consist of three d e sign/ construction
design/construction professional State employees of which a
minimum of one emplovee shall be a licensed architect or
engineer as appointed by the Director of State Construction and
two members of the SBC as appointed by the Chairman of the
Commission of which a minimum of one shall be a licensed
contractor.
(f) The panel may recommend to the State Building
Commission either of the following actions as a result of jts
review:
( 1 ) disqualification of the contractor from bidding and
placement of the contractor jn a pre-bid
disqualification status for a corrective period ot" two
years:
(2) rejection of disqualification but issuance of a warning
to the contractor that continued poor performance mav
result in disqualification.
The SCO will retain file copies of the ratings, disqualifications
and warnings.
ff) ig} In all instances, notification of a contractor hav ing
been assigned to a pre-bid disqualification status or having been
issued a warning shall be bv the Chaiiman of the State Building
C-immission and onlv then after review and approval bv the
Ct. ■'mission of the disqualification or warning action.
(g) [h] The normal disqualification as approved bv the
Commission shall be for a period of tvvo years. The two-year
period is intended to prov ide opportunity for a contractor to
implement significant corrective action to improve performance.
At the completion of the tvvo-vear period, the prime contractor
can make application for reinstatement to the qualified bidders
list: reinstatement will be subject to action by the SBC. If the
SBC approves reinstatement, the contractor's pre-bid
disqualification will be removed, thus allowing the contractor to
bid.
{h) tij Removal of a contractor from the pre-bid
disqualification status, upon approval bv the SBC. will involve
deletion of all evaluations from the State Construction Office's
records.
(4) IjJ If a contractor has been removed from the qualified
bidders list bv virtue of accumulated evaluations falling below
3.5 and routine removal of five-vear old evaluations causes the
contractor to achiev e an ov erall evaluation score of 3.5 or higher,
the contractor will not be automaticallv reinstated to the
qualified bidders list but rather must remain in a disqualified
status for a total of tvvo vears w ith reinstatement considered bv
the SBC as outlined in this Rule. If after the tvvo-vear corrective
period the SBC does not approve removal of a contractor from
the pre-bid disqualification status, the prime contractor vs ill be
allowed the opportunity to reapply after a period of 12 months
and annually thereafter until the pre-bid disqualification status
is removed.
(j-) [kj Lists of all contractors who are in a pre-bid
disqualification status will be maintained bv the SCO. Prior to
bid opening, the project designer will be responsible for
obtaining from the SCO a list of those contractors in a pre-bid
646
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
disqualification status and shall ensure that no bids for State
capitil impro\'om e nts improvement projects will be read from a
contractor in such status.
Aiahorin- G.S. 145-135.2614).
w w w w
Notice is hereby given in accordance with G.S. 150B-21.2
ihui the Department of .Admini.stration intends to amend
rules cited as 1 NCAC 35 .0101. .0103. .0202. .0205. .0304.
. 0308. Notice of Rule-making Proceedings was publislied in the
Register on August 14. 1998.
Proposed Effective Date: .April I. 1999
A Public Hearing will be conducted at 10:00 a.m. on November
18. 1998 at the .Administration Building. Governor's Press
Conference Room. P' Floor 116 West Joties Street. Raleigh.
NC.
Reason for Proposed Action: The Campaign has grown
greatly in recent years and many charitable organizations wish
10 pariicipale in the campaign. More detailed application
procedures have become necessary, and clearer definition of
local responsibilities are now desirable. Small organizations
needed flexibility in providing financial information, which is set
out in the proposed rules, along with technical changes.
Comment Procedures: .All written comments should be made
to P. Glen Peterson. General Counsel, Department of
Adt.iinistration. 116 West Jones Street. Raleigh. NC 2^603-
8003. telephone (919) '33-'232.
Fiscal Note: These Rules do not affect the expenditures or
revenues of slate or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars I S5. 000.000) in a 12-month period.
CHAPTER 35 - STATE EMPLOYEES COMBINED
CAMPAIGN
SECTION .0100 - PURPOSE AND ORGANIZATION
.0101 DEFINITIONS
For purposes of this Chapter, the following definitions apply:
(1) "Charitable organization." A non-partisan
organization that is tax-exempt for both the IRS and
NC tax purposes. The organization must receive
contributions that are tax deductible b\ the donor.
(2) "Audit" or "audited financial statement." An
examination of financial statements of an organization
b\ a CPA, conducted in accordance v\ith generalK'
accepted auditing standards, to detemiine whether, in
the CPA's opinion, the statements conform with
generally accepted accounting principles or, if
(3)
(4)
(5)
(6)
(V)
(8)
("))
applicable, v\'ith another comprehensive basis of
accounting.
"State Emplovees Combined Campaign" or "SECC."
The official name of the state employees charitable
fund-raising drive.
"Federation" or "Federated Group" means a group of
voluntar) charitable human health and welfare
agencies organized for purposes of suppKing
common fund-raising. administrative. and
management services to its constituent members.
"Fund-raising expenses" (supporting activities) means
expenses of all activ ities that constitute, or are an
integral and inseparable part of. an appeal for
financial support. Fund-raising expenses represent
the total expenses incurred in soliciting contributions,
gifts, grants, etc.: participating in federated fund-
raising campaigns; maintaining donor mailing lists;
preparing and distributing fund-raising manuals,
instructions and other materials; and conducting other
activ ities involved with soliciting contributions.
"Administrative expenses" (supporting activities)
means expenses for reporting and informational
activities related to business management and
administrative activities v\ hich are neither educational,
nor direct conduct of program services, nor fund-
raising services.
"Program service expenses" means expenses for those
activities that the reporting organization was created
to conduct which fulfill the purpose or mission for
v\hich the organization exists, exclusive of fund-
raising and administrative expenses, and which, along
w ith anv activ ities commenced subsequentiv', form the
basis of the organization's cun-ent exemption from tax.
"Fund-raising consultant" means anv person v\ho
meets all of the following:
(a) is retained by a charitable organization or
sponsor for a fixed fee or rate under a written
agreement to plan, manage, conduct, consult,
or prepare material for the solicitation of
contributions in this State;
(b) Does not solicit contributions or emplov,
procure, or engage any person to solicit
contributions; and
(c) Does not at anv time have custody or control of
contributions.
"Fund-raising solicitor" means any person who is not
a fund-raising consultant and does either of the
follow ing for compensation:
(a) Performs an\ service. including the
employment or engagement of other persons or
services, to solicit contributions for a charitable
organization or sponsor; or
(b) Plans, conducts, manages, consults, vshether
directly or indirectly, in connection with the
solicitation of contributions for a charitable
organization or sponsor.
"Review" or "reviewed financial statement." An
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NORTH CAROLINA REGISTER
October 15, 1998
647
PROPOSED RULES
examination of financial statements of an organization
b\ a CPA. The CPA performs inquir\ and anal\ticai
procedures that provide the CPA with a reasonable
basis for expressing limited assurance that there are
no material modifications that should be made to the
statements in order for them to be m con form it\ with
ueneralK accepted accounting principles or. jf
applicable, with another comprehensive basis of
accounting.
AiilhorinGS. 1-13-3.3: 143B-10.
.0103 ORGANIZATION OF THE CAMPAIGN
The State Emplo\ees Combined Campaign is organized as
follows:
( 1 ) Chair. Each Near the Governor ma\ appoint a
Statewide Combined Campaign Chair from one of the
Executive Cabinet. Council of State. S\stem of
Communit\ Colleges, or Universit\ Administration
agencies. The Campaign Chair or the Campaign
Chair's designee shall serve as director of the
campaign. The responsibilities of the Chair include
setting the dates and approving the published
materials for the Combined Campaign, contracting for
the Statew ide Campaign Organization, and appointing
and serving as chair of the SECC Adv. ^v^
Committee. For the purposes of selecting a Statewide
Campaign Organization, the Statewide Combined
Campaign Chair will consider the following criteria:
(a) The organization must have demonstrated
abilirv to manage large-scale fund-raising
campaigns.
(b) The organization must have the abilit) and
willingness to work with a statew ide svstem of
local organizations capable of effectively
managing local combined campaigns and
relating to the Statewide Campaign
Organization.
(c) The organization must have an audit to
demonstrate acceptable financial
accountability..
(d) The organization must be a tax-exempt
organization under the Internal Revenue Code.
(e) The organization must be willing and able, if
required, to provide a bond in an amount
satisfacton. to the SECC Adv isor> Committee
to protect the participant organizations and
donors, contributors.
(2) SECC Advisor> Committee. This ongoing committee
serves as a central application point for all charitable
organizations applving to participate in the SECC.
The Committee recommends overall policv for the
campaign to the Gov emor. the Statew ide Campaign
Chair, and necessan. state agencies and recommends
the criteria for participation bv charitable
organizations. The Committee reviews the
recommendations made bv the Statew ide Campaign
(3)
(4)
Organization and accepts or rejects its
recommendations. The Committee may. in its
discretion, require the Statewide Campaign
Organization to provide a bond, as prov ided in Sub-
item ( I )(e) of this Rule. The Committee is composed
of at least 10 state emplovee members appointed bv
the Statev\ ide Campaign Chair Members ser\ e three-
vear staggered terms at the pleasure of the Statewide
Campaign Chair. If a vacancv occurs, the Slatevside
Campaign Chair shall appoint a replacement to fill the
unexpired term. An\ member mav be reappointed at
the end of his or her term.
Statewide Campaign Organization. The Statewide
Campaign Organization shall be selected b\ the
Statevside Campaign Chair. The duties of the
Statew ide Organization include, but are not limited to.
the follow ing:
(a) serv ing as the financial administrator of the
SECC?
(b) detennining if the applicant agencies meet the
requirements of Rule .0202 of this Chapter;
(c) submitting to the Statewide Campaign Chair
the name of an organization to serve as Local
Campaign Organization:
(d) providing the necessarv supervision of data
processing services in order to process all
payroll deduction pledge fornis of state
emplo>ees:
(e) receiving reports from the Local Campaign
Organization;
(f) transmitting to each Local Campaign
Organization its share of the state empIo>ees
pavroll deduction funds;
(g) printing and distributing the pledge form, the
campaign report form and collection envelopes
to the Local Campaign Organization;
(h) maintaining an accounting of all funds raised
and submitting an interim unaudited end-of-
campaign report of the following:
(i) amounts contributed and pledged;
(ii) number of contributions; and
(iii) amounts distributed to each participating
agencv;
(i) Once applications for acceptance into the
campaign have been recommended to the
SECC Advisor> Committee bv the Statev\ide
Campaign Organization, preparing a list of all
accepted organizations and distributing them to
all applicants, applicants;
(i) coordinating an annual statewide or regional
training session for Local Campaign
Organizations and state emplovee volunteers;
(k) serving as liaison to participating charitable
organizations.
Local Campaign Chair. The Governor, if asked by the
local charitable organizations accepted into the
Combined Campaign, mav appoint an area
648
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
representative from either state government or the
University of North Crroiina system to serve as the
Local Chair. This person will be responsible for
forming a Local Advisory Committee for recruitment
of volunteer state employees, employees, confirming
to p management support, communicating to area state
employees the Chair's support for and participation in
the campaign, and providing that the campaign is
conducted using the knowledge and expertise of the
SECC to insure success. The Local Advisory
Committee is responsible for the approval of local
campaign lit e ratur e , review of past performance, the
establishment of local goals as needed, a^ the
distribution of an\ undesignated funds made available
for di s tribution, distribution, the development of a
budget and campaign plan, the approval of local
publicity materials, the conduct of the campaign, and
the recognition of volunteers and contributors.
(5) The Campaign Chair shall approve or reject the State
Campaign Organization's recommendation for Local
Campaign Organization and name an agency as the
Local Campaign Organization. The Local Campaign
Organization must identify itself on all printed
materials as the local SECC organization.
(a) Any SECC charitable organization wishing to
be selected as a Local Campaign Organization
must submit a timeK application in accordance
with the deadline set by the Statewide
Campaign Organization that includes:
(i) A written campaign plan sufficient jn
detail to a llow the SCO to determine if
the applicant could administer an
efficient and effective SECC. The
campaign plan must include a proposed
SECC budget that details al] estimated
costs required to operate the SECC.
The budget ma\ not be based on the
percentage of funds raised in the local
campaign.
(ii) A statement signed by the applicant's
director or equivalent pledging to:
(A) administer the SECC fairly and
equitably.
(B) conduct campaign operations
(such as training, kick-off and
other events) and fiscal
operations (such as banking,
auditing. reporting and
distribution) separate from the
applicant's non-SECC operations.
and
(C) abide by the directions, decisions
and supervision of the Statewide
Campaign Organization. State
Advisory Committee and the
Local Campaign Advisory
Committee.
(a)
tfe)
campaign
of campaign
of volunteer
(iii) A statement signed by the applicant's
director or equivalent acknowledging
that applicant js subject to the
provisions of Title Jj Chapter 35. North
Carolina Administrative Code. State
Employees Combined Campaign.
(b) For the purpose of selecting a Local
Campaign Organization, the Statewide
Campaign Chair and Statewide Campaign
Organization will consider the following
criteria:
(i) whether the local organization is willing
to conduct a local SECC;
(ii) whether the organization agrees to
comply with the temis of the State/Local
Organizations contract;
(iii) whether the organization has community
and state employee support and
volunteer involvement;
(iv) whether the organization has a
demonstrated ability and successful
history of managing fund-raising
campaigns that include:
(A) development of
strategy;
(B) development
materials;
(C) development
campaign structures;
(D) training of volunteer solicitors;
(E) a financial structure and
resources that can efficiently
manage, account for. and
disburse funds;
(F) being a participant organization
of the campaign;
(G) ability to develop financial
relationships with a network of
statewide organizations so as to
ensure the orderly transmittal,
disbursement, accounting of and
reporting of donations and
pledges;
(v) whether the organization is willing and
able to provide a bond, if required, in an
amount satisfactory to the SECC
Advisory Committee to protect the
participant organizations and donors.
contributors.
(c) The Local Campaign Organization shall
assist the Local Campaign Chair and Local
Campaign Advisory Committee in the training
of volunteers, the ordering printing and
distribution of campaign literature, the
collection of pledge reports and envelopes
from the state agency volunteers, the
development of campaign reports, and the
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NORTH CAROLINA REGISTER
October 15, 1998
649
PROPOSED RULES
(e^
forwarding of one cop\ of each pa\roll
deduction pledge to the Statew ide Campaign
Organization. In addition, an end of campaign
report shall be sent to the Statewide Campaign
Organization b\ Februar} I following the close
of the campaign on December 3 1 for inclusion
in the required fiscal reports.
(d) Thu Local Campaign Organization shall:
(i) e'. iabli s h consider establishing an
interest-bearing account w ith a bank in
order to recei\e deposits of collected
funds. Interest earnings shall be
disbursed to each participating
federation and independent agencx
based on its proportionate share of the
campaign's total gross contributions;
contributions if an interest-bearing
account is established:
(ii)
distribute the funds from the
contributions in accordance with
designations made b\ state emplo\ees.
Undesignated funds shall be distributed
in accordance with the rules in this
Chapter. Each Local Campaign
Organization sha'' distribute
contributions quarterl) "i participating
federations and independent agencies:
be permitted to deduct, before an>
disbursements are made, direct costs of
operating the campaign from the gross
contributions, and shall charge each
federation or independent agenc\ its
proportionate share of the campaign's
operational cost. The Local Campaign
Organization shall justifS the actual
costs of the campaign, which should not
exceed 10°o of gross receipts: and
notifv the federations and independent
agencies no later than March 1
following the close of the campaign on
December 3 I of the amounts designated
them and their member agencies and of
the amounts of the undesignated funds
allocated to them.
(6) A contract between the state and the Statewide
Campaign Organization, and the Statew ide and Local
Campaign Organizations, will be executed in order to
de\elop an acceptable audit trail. The contracts will
allow a reasonable charge for campaign expenses to
be claimed b\ the Statewide Campaign Organization
and the Local Organization. All terms and conditions
of these contracts are subject to re\ iew and appro\al
b\ the Statew ide Campaign Chair.
(a) The Statewide Campaign Organization and
Local Campaign Organizations shall reco\er
from gross receipts of the campaign their
expenses, which should reflect the actual costs
(i\)
of administering the campaign. Actual costs of
the campaign must be justified and should not
exceed lO^o of gross receipts. The campaign
expenses shall be shared proportionately by all
the recipient organizations reflecting their
percentage share of gross campaign receipts,
(b) The failure of the Statewide Campaign
Organization or the Local Campaign
Organization to perform an\ of its respecti\e
responsibilities listed in this Section ma\ be
grounds for remo\al and disqualification b> the
Chair to ser\e in its capacir\ for one _\ear.
Before deciding on remo\ ing or disqualifying
an organization, the Chair shall gi\e the
organization an opportunit) to respond to an\
allegations of failure to perform its
responsibilities. The organization must submit
its response to the Chair within 10 da_\s from
notification postmark date. The Chair shall
issue a written determination based on a re\ iew
of all of the infomiation submitted.
AiiihohnGS. 143-3.3: 143B-III.
SECTION .0200
APPLICATION PROCESS AND
SCHEDLLE
.0202 CONTENT OF APPLICATIONS
(a) All organizations seeking inclusion in the State Emplo\ees
Combined Campaign must submit an application to the state
campaign. The application must include a completed State
Employees Combined Campaign Certificate of Compliance.
pro\ ided bs the Statewide Campaign Organization. Included in
or attached to the Certificate ot . ompliance must be:
(1) A letter from the board of directors requesting
inclusion in the campaign.
(2) A complete description of ser\ices pro\ided the
ser\ice area of the organization, and the percentage of
its total support and re\enue that is allocated to
administration and fund-raising.
(3) The most recent audited financial statement prepared
b\ a CRA within the past two \ears. The SECC
Ad\isor\ Committee shall pemiit organizations with
annual budgets of less than three hundred thousand
dollars (S300.000 1 total support and re\enue to submit
an audited financial statement or re\iew prepared by
a CP.A. Total support and re\enue js determined by
the IRS Form 990 co\ering the organization's most
recent fiscal \ear ending not more than two years
prior to the current \ ear's campaign date. The \ear-
end of such audited financial statement or review
must be no earlier than tw o \ ears prior to the current
year's campaign date. The SECC Ad\isop.
Committee ma\ grant an exception to this requirement
if an organization has filed its Articles of
Incorporation with the Secretar\ of State's Office
since March 1 of the preceding \ear of the current
650
NORTH CAROUX4 REGISTER
October L\ 1998
13:8
PROPOSED RULES
campaign.
(4) A signed cop\ of the organization's IRS 990 foirn,
regardless of whether or not the IRS requires the
organization to fUe this form, er — s uffic ie nt (3)
docum e ntation to indicate program services,
administrative and fund-raising expenses. The IRS
990 forni and CPA audit or review shall cover the
same tiscal year and, if revenue and expenses on the
two documents differ, these amounts must be
reconciled on an accompans ing statement by the CPA
who completed the financial audit or review.
(5) A board statement of assurance of non-discrimination
of employment, board membership and client
services.
(6) A description of the origin, purpose and structure of
the organization.
(7) A list of the current members of the board, including
their addresses.
(8) A letter from the board of directors certifying
compliance with the eligibility standards listed in (4)
Paragraph (b) of this Rule.
(9) When a federated fund-raising organization submits
an application. the> ma\ submit the credentials of the
federation onl>. not each member agenc>. By the
submission of such, the federations certily that all of
their member agencies comply with all the SECC
regulations, unless there are exceptions. If there are
exceptions to the requirements, the federations must
disclose such and explain to the satisfaction of the
Statew ide Combined Campaign Ad\ isorv Committee
the reasons for the exception. The SECC Advisor' (5)
Committee may elect to review, accept or reject t'le
certifications of the eligibilit\ of the member agencies
of the federations. If the Committee requests
information supporting a certification of eligibility,
that information shall be furnished promptK. Failure (6)
to furnish such information within 10 days of the
notification postmark date constitutes grounds for the (7)
denial of eligibilit\ of that member agency.
( 1 0) The SECC Advisory Committee may elect to decertify
a federation or independent agency which makes a
false certification, subject to the requirement that any (8)
federation or independent agencN that the Committee
proposes to decertify shall be notified by the
Statewide Campaign Organization of the Committee's
decision stating the grounds for decertification. The
federation or independent agenc\ may file an appeal (9)
to the Committee within 10 days of the notification
postmark date. False certifications are presumed to be
deliberate. The presumption ma\ be overcome by
evidence presented at the appeal hearing,
(b) Organizations must meet the following criteria to be
accepted as participants in the Combined Campaign:
( 1 ) Must be licensed to solicit funds in North Carolina if
a license is required b> law.
(2) Must provide written proof of tax exempt status for
both federal and NC tax purposes. Organizations
must certifs that contributions from state employees
are tax deductible by the donor contributor under NC
and federal law.
Must prepare and make available to the general public
an audited financial stat e ment, statement prepared by
a CPA within the past two \ears. The SECC
Advisors Committee shall permit organizations with
annual budgets of less than three hundred thousand
dollars (S300.000) total support and revenue to submit
an audited financial statement or review prepared by
a CPA. Total support and revenue js detennined by
the IRS 990 form covering the organization's most
recent fiscal \ear ending not more than two Nears
prior to the current \ ear's campaign date. The SECC
Advisory Committee may grant an exception to this
requirement if an organization has filed its Articles of
Incorporation with the Secretary of State's Office
since March 1 of the preceding year of the current
campaign.
If fund-raising and administrative expenses are in
excess of 25 percent of total revenue, must
demonstrate to the satisfaction of the SECC that those
expenses for this purpose are reasonable under all the
circumstances of the case. The SECC ma>' reject any
application from an agency with fund-raising and
administrative expenses in excess of 25 percent of
total revenue, unless the agency demonstrates to the
satisfaction of the Committee that its actual expenses
for those purposes are reasonable under all the
circumstances in its case.
Must certify that all publicity and promotional
activities are truthful and non-deceptive and that all
material provided to the SECC is truthful, non-
deceptive, includes all material facts, and makes no
exaggerated or misleading claims.
Must agree to maintain the confidentiality of the
contributor list.
Must permit no pa\ments of commissions, kickbacks,
finders fees, percentages, bonuses, or overrides for
fund-raising, and permit no paid solicitations by a
fund-raising consultant or solicitor in the SECC.
Must have a policy of non-discrimination on the basis
of race, color, religion, sex, age, national origin or
physical or mental disability for clients of the agency,
employees of the agency and members of the
governing board.
Must provide benefits or services to state employees
or their families within a solicitation area. Examples
of services include:
(A) research and education in the health and
welfare or education fields;
(B) family and child care services;
(C) protective services for children and adults;
(D) services for children and adults in foster care;
(E) services related to the management and
maintenance of the home;
(F) da\ care services for adults and children;
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NORTH CAROLINA REGISTER
October 15, 1998
651
PROPOSED RILES
(G) transportation ser\ ices, information referral
and counseling ser\ ices;
(H) the preparation and deli\er\ of meals:
(I) adoption ser\ices;
(J) emergence shelter care and relief services:
(K) safet\ services:
(L) neighborhood and communil\ organization
services:
(M) recreation services:
(IM) social adjustment and rehabilitation serv ices:
(O) health support serv ices: or
(P) a combination of serv ices designed to meet the
needs of special groups such as the elderlv or
disabled.
However, an international organization vshich provides health
and welfare services overseas, whose activities do not require a
local presence and which meet the other eligibility criteria in
these Rules, mav be accepted for participation in the campaign.
AuihonnG.S. 143-33: 1438-11).
.0205 .AGREEMENTS
(a) Following acceptance into the SECC. federations and
independent agencies shall execute a contract with the State.
The parties shall agree to abide bv ^he terms and conditions of
the rules. The contract shall be sii. =d bv the State Chair, the
Statew ide Campaign Organization, the organization's board chair
and the organization's chief executive officer
(b) Each federation shall accept responsibilitv for the
accuracv of the distribution amount to their member agencies.
Each federation must be able to justify amounts deducted from
their disbursements to participating agencies. These deductions
shall not exceed 10°o of gross receipts. Each federation must be
willing and able to provide a bond, if required, in an amount
satisfactop. to the SECC .Advisorv Committee to protect the
participant organizations and donors, contributors.
AurhorinG.S. 143-3.3: 143B-W.
SECTION .0300 - GENER-AL PROVISIONS
.0304 P.AVMENT .METHOD .AND TERMS OF
CONTRIBUTION
Pavment mav be made bv pavroll deduction, cash, or personal
check. If an emplovee chooses to use the pavroll deduction
method of contributing, he she must agree to have the deduction
continue for one vear with equal amounts deducted from each
check (monthlv (monthly, semi-monthlv or hivv eeklv depending
on the pavroll). .All deductions will start with the .lanuarv
pavroll and continue through December. If the emplovee
discontinues emplovment. or activelv chooses to discontinue
pavment. the state will not be responsible for the collection of
the unpaid pledge. No deduction w ill be made for anv period in
which the emplovee's net pav. after all legal and prev iouslv
authorized deductions, is sufficient to cover the allotment. No
adjustments will be made in subsequent periods to make up for
deductions missed.
.Amhorin G.S. 143-3:3: 143B-10.
.0308 EFFECTIVE DATE OF AMENDED RULES
These amended rules shall be effective for the 199 1 1999
SECC and thereafter.
.Authorin G.S. 143-3:3: 1438-10.
TITLE 4 - DEPARTMENT OF COMMERCE
Notice is hereby given in accnrdance with G.S. 150B-21.2
ihut the Department of Commerce-Commerce Finance
Center intends to amend rules cited as 4 \C.4C IE .0104. .0202.
.U205-.020-. .0303. .0306: 4 .\C4C II .0101-.0102. .0201-
.0202. .0301-.0302. .0402-.0404. .0501-.0503. .0''01: 4 SCAC
1K.0101-.0105. .0202-.0206. .0301-.0302. .0401-.0402. .0404:
and repeal rules cited as 4 \CAC 11. 0303-0304. .0401. .0405.
.0601.
Proposed Effective Date: .April 1. 1999
■A Public Hearing will he conducted at 10:00 a.m. on October
30. 199S at the Department of Commerce Conference Room.
.\'eif Education Building. Fourth Floor 301 \. Wilmington
Street. Raleigh. \C 2'626.05'1.
Reason for Proposed .Action:
4 yCAC IE. 0104, .0201:0202, .0205-.0207 .0303, .0306 - For
the Industrial Revenue Bond program, rule changes arise from
the 1995 amettded legislation, which allow the initial operator
of an industrial project to he replaced by a ne\v operator during
the term of the bonds if certain findings are made by the
Secretaiy as to the new operator
4 \CAC II.0101-.0I02, .0201:0202, .0301:0304, .0401:0405,
.0501:0503, .0601, .0701 - For the Industrial Development
Fund , rule changes arise from recent additions or changes to
the William S. Lee .Act: increase in IDF funding, the allowance
of 2% of the funds for grant administration, the addition of Tier
.Area designations, local government matching requirements
specified, editorial changes needed to effect efficient
administration of the program.
4 yCAC IK .0101:0105, .0202:0206, .0301:0302, .0401-
. 0402, . 0404 - For the Community Development Block Grant
program, changes include revision of criteria for necessaiy
findings, no longer requiring local match in Tier One areas,
priority- given to Tier One counties or Development Zones,
requiring cities to have a development zone committee and a
strategy to improve the zone, and basic coordination with
CDBG-related provisions of the William S. Lee .Act.
Comment Procedures: Comments may be submitted to North
Carolina Department of Commerce. .Attention: Robert Hinshaw.
Commerce Finance Ce/tter 301 \. Wilmington Street. PO Box
295-1. Raleidi \C 2'626-05'l.
652
yORTH C.AROLISA REGISTER
October 75. 1998
13:8
PROPOSED RULES
Fiscal Note: These Rules do not affeel the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S 5. 000.000) in a 1 2-month period.
CHAPTER 1 - DEPARTMENTAL RULES
SUBCHAPTER 1 E - INDUSTRIAL AND POLLUTION
CONTROL REVENUE BONDS
SECTION .0100 - PURPOSE AND DEFINITIONS
.0104 OPERATOR
(a) An "operator" shall mean the persons or corporate entitv
entitled to the use or occupancy of a project. Where all or
virtualK all of the stock in one corporate entit\ is owned (either
directK or indirectly ) b\ another corporation ( i.e.. a relationship
commonK known as a "parent— wholly-owned subsidiary") and
w here final management control rests with the parent, "operator"
shall be construed so as to include the total corporate
responsibility implied by such a relationship. Such presumption
maN be rebutted where the Department finds clear and
convincing evidence of the independence of the subsidiary from
the parent.
(b) Onc e th e p e rsons or corporate entities hav e b ee n d e fin e d
as th e op e rators of th e proj e ct, th e n e .xc e pt as h e r e in provid e d.
thos e p e rsons or e ntities will continu e as th e op e rators during th e
t e rm of any bonds issu e d to financ e th e proj e ct. If the initial
proposed operator of a project is not expected to be the operator
for the term of the bonds proposed to be issued, the Secretar>
may make the findings required pursuant to Rules .0303 and
.0307 of" thjs Subchapter only with respect to the initial operator
identified jn the application for approval of the project. When
the cun-ent operator discontinues serving as operator, and
arrangements have been made by the obligor for a new operator,
the new operator will be subject to the approval of the Secretary
pursuant to Rules .0303 and .0307 of this Subchapter.
(c) If an operator subsequentK seeks to sell, to lease, or to
sublease the project to a non-affiliated person(s) or entit\. the
operator must give written notice to the Department of
Commerce including information prescribed b\ the Secretary.
AiiihoritvG.S. I59C-7; 159C-8.
other authorities;
(3) examination of and comment on assembled facts and
data which might be used in the preparation of
application;
(4) analysis of likely or potential procedural or
environmental problems.
(b) At least one week prior to submission to the Department
of a project application, the authority shall arrange for a pre-
application conference with the Department. Parties present at
the pre-application conference will include representatives from
the authority, the Department, the operator, the obligor, if other
than the operator, artd the Local Government Commission.
Commission, and The the Department of Environment and
Natural Resources Resources, and Community D e v e lopm e nt, or
its successor agency, ag e ncy. will b e inform e d of and invit e d to
participate in the conf e rence .
(c) The purpose of the conference is to help ensure that
application procedures and requirements are clearly understood.
und e rstood and that th e application, wh e n acc e pt e d, will b e
complet e and. th e refor e , the application period is short e n e d to
what e v e r e xt e nt po s sibl e.
(d) The operator shall offer verbal, and if available, written
project descriptions. The operator will be encouraged to provide
data relative to the character and volume of process wastes.
water and air discharges of pollutants, as well as any comment
alreadv received from the Division of Environmental
Management.
(e) Another purpose of this conference will be to reach an
understanding among all parties that the project is of the t>'pe
that ma\ be considered for approval by the Secretary. Although
th e s e cr e tary will mak e no d e ci s ions, how e v e r t e ntativ e , prior to
a full con s id e ration o th e compl e t e d applicat i on, the s e cr e tary
will issu e a l e tt e r of s ummary comm e nt if that letter is
r e qu e st e d by th e authority. This l e tt e r will conv e y the s e cr e tary's
comm e nts p e rtin e nt to th e project and th e preparation of th e
authority app l ication. The s e cr e tary will e numerate any points
of conc e rn which ar e d e v e lop e d as a r e sult of informat i on mad e
availab le in th e conf e r e nc e . — Th ese point s of conc e rn will b e
e num e rat e d so that th e authority app l ication may includ e facts
and data p e rtinent to thos e points. Th e i s suanc e of a l e tt e r of
s ummary comm e nt will not pr e clud e th e se cr e tary from raising
n e w qu e stions and ar e a s of conc e rn aft e r an application is
r e c e iv e d.
SECTION .0200 - APPLICATION PROCEDURES
.Author in- G.S. I59C-7.
.0202 PRE-APPLICATION CONFERENCE
(a) Authorities are encouraged to advise the Department when
the authority enters serious consideration of financing a project.
The Department y\ ill assist the authority, as requested. y\ ithin the
limits of available resources. Infonnation. liaison and
coordination will be effected by the Department through the
indu s trial — financ i ng — section. Commerce Finance Center.
Available services include:
( 1 ) provision of forms and documents relating to the
application process with infonnative comments;
(2) comment on the type of projects consummated by
.0205 FORMAL APPLICATION PROCEDURES:
REQUIRED DATA: INFORMATION
(a) When making application for an approval of an industrial
project for a prospective industry or for an existing industry, a
pollution control project for a prospective industry or for an
existing industry, or a pollution control project for a utility, the
authority yvill complete the pertinent application form developed
by the Secretary and made available by the industrial financing
s e ction Commerce Finance Center in the Department of
Commerce.
(b) Any application which has factual data which is
13:8
NORTH CAROLINA REGISTER
October 15, 1998
653
PROPOSED RULES
incomplete or lacking in sufficient detail w ill he returned to the
authority with reasons for the return being stated in writing.
Missing or deficient information will be noted. Once the
requested information is provided, the application will be
accepted as officiall\ received and processing will begin.
AuihiinnCj.S. I59C-': I59C-8.
.0206 FORMAL APPLICATION PROCEDURES:
PUBLIC HEARING
(a) Where the project has caused significant adverse public
reaction as determined from the responses to the public notice or
the public hearing held b\ the elected board of countv
commissioners, or the authorit\. or where the facts are unclear
and do not support clear finding, the SecretaiA ma\ hold a public
hearing on the proposed project for the purpose of obtaining the
views of the community to be affected. The communit\ is
hereb> defined as the count\ in which the project is to be
located.
(b) Public notice shall be given at least seven da\s prior to the
hearing. The notice shall specif\ the date. time, place and
subject matter of the hearing.
(c) A complete transcript of the hearing shall be prepared b\'
the Secretarv. The Secretary shall provide to the Secretan. of the
Department of Environment and Natural Resources &b4
Commun i lx D e \ el opm e. a cop\ of the transcript.
AmhorityUS. I59C-7.
.0207 PRO.JECT CERTIFICATION FROM DENR:
OR ITS SUCCESSOR AGENCY
(a) Prior to giving final consideration to the authority
application, the Secretan, will inform the Secretary of the
Department of En\ ironment and Natural Resources. R e sourc es
and Commun i ty D e v e lopm e nt, or its successor agency, that the
particular application is pending, will furnish him with a copy of
the authority application, and will make a request that the
Department of En\ ironment and Natural Resources and
Community D e v el opm e nt , or its successor agency, issue a
certification, under G.S. l50C-7(3) that in the case of a proposed
industrial project, the proposed project will not have a materialK
adverse effect on the en\ ironment and that, in the case of the
proposed pollution control project, the proposed project will
have a materiallv favorable impact on the env ironment or will
prevent or diminish materiallv the impact of pollution vshich
could otherw ise occur.
(b) Prior to making anv of the findings required in 159C-
7(l)(b) and (2). the Secretan. of the Department of Commerce
will have received the project certification requested from the
Department of Environment and Natural Resources. R e sources
and Community D e v e lopm e nt , or its successor agency.
AulhorilyG.S. !59C-'^.
SECTION .0300 - REVIEW CRITERIA
.0303 MANUFACTURING WAGE TEST
(a) G.S. I59C-7 specifies that the secretary mav' not approve
the project unless he finds that the operator of the proposed A
project pa\s or has agreed to pa) thereafter an average weekly ▼
manufacturing wage w hich is either:
( 1 ) above the average weeklv manufacturing v\age paid in
the countv, or
(2) not less than 10 percent above the average weekK
manufacturing v\age paid in the state.
(b) The Department vsill be able to make the required finding
that either the operator pays an above-average weekly
manufacturing wage or that the operator has agreed to pav an
above-average weeklv manufacturing wage, if the operator
presents clear and convincing evidence to substantiate the
finding. The presentation of wage data will relate to a specific
time frame. If the presentation is from an industry with an
existing work force, the operator mav compare the annual
average v\eeklv manufacturing vsages paid to his employees for
a time period vshich coincides v\ith that used b_v the Emplovment
Security Commission in compiling the latest available annual
average insured weekK' manufacturing vv ages bv county. If, for
a stated reason the existing companv wants to compare the
wages paid to its employees during a later time period, or if the
operator js a proposed industry which will present data on
proposed and planned average vveeklv manufacturin g wages, the
operator will make that comparison against a figure which has
been prepared b> ttw — Labor — R e sourc e s — S e ction — of the
D e partm e nt of Comm e rc e , or its succ e ssor. Commerce Finance
Center. That figure will provide an estimate of the average A
weekK manufacturing wage for the countv and for the state ^
during a time period corresponding to that period of time used by
the operator. The Labor R e sourc es S e ction Commerce Finance
Center v\ ill prepare that figure bv :
( 1 ) posting the latest available annual average weekly
manufacturing v\ages per worker from th e tabl e of
statistics entitl e d "Insured Emp l ovm e nt and Wag e s by
Broad Industry Group s by County" in th e volum e
" N orth Carolina Insur e d Emplovm e nt and W'ag e
Paym e nts," as published bv the Emplovment Securitv
Commission of North Carolina; and
(2) applving adjustment factors to those figures to \ield
estimates of current and projected annual average
weeklv manufacturing v\ages by countv and for the
state. Annual adjustm e nt factors will b e d e v e loped by
computing th e av e rag e annual p e rc e nt chang e in
insur e d w ee kly manufacturing wag e s for the Stat e of
North Carolina for th e most r e c e nt fiv e v e ar period.
If th e op e rator i s a propos e d indu s try , th e op e rator
will pr e s e nt data on propos e d and plann e d av e rag e
v\ ee klv manufacturing wag es for a particular tim e
p e riod. Th e comparison to show that th e op e rator has
agr ee d to pay an abov e av e rag e vv ee klv manufacturing
wag e , which will be mad e against a figur e pr e par e d bv
th e Labor R e sourc e s S e ction, or its succ e ssor, as
provid e d abov e .
(c) An applicant mav attempt to shov\ that this methodologv
does not yield valid results for the countv in question. To
prevail, the applicant must be prepared to prove that his estimate
654
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
of average weekly manufacturing wages is correct by showing
of clear and convincing evidence.
(d) Where the industrial project does not meet the
requirements in (a) of this Rule, a project may nonetheless be
approved by the Secretary if:
(1) The governing body of the county submits a
resolution to the effect that the project be approved
notwithstanding the fact that the operator will not pay
an average weekly manufacturing wage which is
above the average weekly manufacturing wage paid in
the count\ : and
(2) The Labor Resources Section of the Department of
Commerce, or its successor, makes a finding from
various labor statistics available to the Department
that unemployment in the count> is especially severe.
For the purpose of this Section, "especially severe
unemplovinent" will be defined as:
(A) unemployment which the Employment Security
Commission statistics indicate to b e at l e ast
five percent for the most rec e nt month, and that
for the most recent six month period e nd in g
with that month, hav e has averaged either:
(i) at least 10 percent, or
(ii) at least 125 percent of the average
unemployment rate for the State of
North Carolina; Caro l ina, and is at l e ast
fiv e p e rc e nt: or
(B) where the Department can detemiine that there
has been within the past 12 months, or will be
in the immediate future, a permanent closing by
any employer in the county which resulted, or
will result in the loss of employment b\' at l e ast
300 workers, or at least a number of workers
that, at the discretion of the Secretar>. js
determined to be large enough to have a
measurable adverse impact upon the labor
force of the county, e qual to or gr e at e r than
fiv e p e rc e nt of th e curr e nt labor forc e for th e
county, as publish e d in th e most r e c e nt"North
Carolina Labor Forc e Estimat e by Counr;y'."
The purpose of this provision is to assist in the
creation of employment opportunities for
individuals displaced by industrial plant
closings. This provision ma\ not be used as
justification for a finding of especially severe
unemployment if approvals granted on the
basis of a particular plant closing have created
more jobs than were lost in the closing.
(3) In the case of a finding made on the basis of (d)(2)(A)
or (d)(2)(B) of this Paragraph, the finding will
document that:
(A) the condition of "especially severe
unemployment" existed at the time the
authority agreed to make financing available
for the project by executing an inducement
agreement; and
(B) the condition of "especially severe
unemployment" still exists at the time the
project is approved by the Secretary.
Authorin-G.S. 159C-7.
.0306 JOBS SAVED OR GENERATED TEST
(a) G.S. I59C-7 specifies that in the case of either "... an
industrial or a pollution project, except a pollution control
project for a public utilits': that the jobs to be generated or
saved, directly or indirectly by the proposed project will be large
enough in number to have a measurable impact on the area
immediately surrounding the proposed project and will be
commensurate w ith the size and cost of the proposed project."
(b) The Department will use as a guideline, a standard of
requiring one job saved or generated for each on e hundr e d
thousand do l lars ($100.000) two hundred fift> thousand dollars
(S250.000) of bond financing for a project located jn an
Enterprise Tier 4 or 5 area, or one job saved or generated for
each three hundred thousand dollars ($300.000) of bond
financing for a project located jn an Enterprise Tier L 2 or 3
area. This ratio may be lower and still acceptable depending
upon other critical factors, including but not limited to:
(I) the wage scale of the facility;
the present economic situation in the county;
effect of the facility on the tax base of the county;
the expected effect that the industrial facility will have
on the development of new industry and services as
well as any other factors which the applicant feels
pertinent to the issu e , issue;
the machinery and equipment financed is "state of the
art" in technology increasing efficiency wi'h moderate
effect on employment.
(c) The applicant has the burden of demonstrating that the
jobs saved or generated will have a measurable impact on the
county. The applicant must show by clear and convincing
evidence the number and type of such jobs generated or saved.
AuihorityG.S. 159C-7.
SUBCHAPTER II - INDUSTRIAL DEVELOPMENT
FUND
SECTION .0100 - PURPOSE AND DEFINITIONS
.0101 BACKGROUND AND OBJECTIVES
(a) BASIC — The purpose of the North Carolina Industrial
Development Fund ( also to b e known as the Industrial Bu i lding
and R e novation Fund) is to assist local, town, city or county
governments with incentive industrial financing locat e d in th e
most e conomically d e pr es s e d counti e s i n th e stat e in areas of the
state that have been designated as eligible tier areas by NC
General Statutes. This assistance will be js intended to help
tho se unit s of gov e rnm e nt create n e w jobs by providing
financing for th e r e novation or improvem e nt and expans i on of
manufacturing or industria l buildings so as to induce "private
profit making " e ntities to occu p y, by lease or purchas e , and to
op e rate manufacturing or industrial — busin e ss e s, units of
(2)
(3)
(4)
ill
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NORTH CAROLINA REGISTER
October 15, 1998
655
PROPOSED RULES
government offer to its new and expanding industr\; new or
improved infrastructure, or funds for buildinti reno\ation and
equipment in exchanLie for commitments to create new, full-time
jobs in industries currentK eliuible under NC General Statutes.
(The fund js not desiened to be used for the acquisition of land
and buildings or constructinti ne\s buildinas.) I f the assistance js
used for infrastructure, jt will be granted to local governments
with no repayment: howe\er. it~it is used to purchase equipment
or to reno\ate industrial buildings, then the funds must be
repaid. But vshether a grant or a loan, the amount of funds to be
made available for a project will be determined b\ the number of
new jobs committed, w ith a maximum job limit and project limit
as currentK authorized for the program h\ NC General Statutes.
fb^ Th e obj e ctiv e of this program will b e to provid e n e w full
tim e jobs for North Carolina citiz e ns. Th e D e partm e nt will
necessarilv determin e t ha t th e r e novation s and i mprov e ments ar e
a ne c es saP v pa n of th e privat e firms d e ci s ion to prov id e th e n e w
job s . If it is d e t e rm i n e d that th e privat e tlmi would hav e (or has
.0102 DEFINITIONS
fa4 "D e partm e nt" m e ans the D e partm e nt of Economic and A
Commun i tv D e v e lopm e nt, or its S e cr e tary. ▼
(a) "Department" means the North Carolina Department of
Commerce, or jts Secretan.
fb4 Act" m e ans S e ction 111 Part XXII of th e consolidat e d
budg e t act codifi e d as Chapt e r 830 of th e 19 8 7 S e ssion Laws
and am e nd e d by G.S. M3B 4 37A. 1Q80.
(b) "Applicant" means a North Carolina unit of government
that applies for IDF funds.
fe^ "App l icant" m e ans a unit of c i tv gov e rnm e nt locat e d in a
qualitl e d countv or a unit of countx gov e rnm e nt
wh i ch m ee ts th e d e f i nition of a qualitl e d countv.
(c) "Industrial Development Fund" means the fund w ithin the
Department's fiscal structure jn v\hich the appropriation of
monies for industrial development projects js received and
disbursed.
fd^ "Indu s trial D e v e lopm e nt Fund" m e ans th e appropriation of
alr e ady — b e gun — te-) — sp e nd — pr i vat e — mon e y — te — mak e — th e s e moni e s given to th e D e partment for th e s e
purpos e s. Thi ;:. fund will al s o b e known as and ref e rr e d to as th e
industrial Bui l ding R e novation and Improvem e nt Fund .
(d) "IDF" means the Industrial Development Fund.
( e ) "Qua l ifi e d County m e ans one of th e 50 mo s t e conomically
d e pr e ss e d counti e s in th e state. The Secr e tary of th e Departm e nt
shall d e t e rmin e which counti e s ar e th e most e conomically
depr e ss e d counties in the stat e bas e d on: rat e of un e mploym e nt,
p e r cap i ta income, and r e lativ e population and work forc e
growth or lack of growth, as d e t e rmin e d bv th e S e cr e tary. Th e
figur es us e d in making this comparison and th e delin e ation of
"most" and "least" will b e th e lat e st availabl e p e r capita incom e
tigur e s by countv. as docum e nt e d in a publish e d form bv any
Stat e or F e d e ral Ag e ncy — g e n e rally — r e cogniz e d as having
expertise and cr e ditabilitv in th e s e fi e ld s .
(f) "Em e rg e ncy As s istanc e Qualifi e d C ou nty" m e ans any
ASSISTANCE — This special assistance from the Industrial
Development Fund, which js used at the discretion ot' the
Secretary, js available to units ot" governmen t that have, or will
imminentiv ^ perience. a loss of 500 or more manufacturing
jobs jn the county, or a number of manufacturing jobs equal to
at least I0°o of the manufacturing workforce jn the countv.
Where a unit ot' government relies on the 500 jobs loss as the
threshold for obtaining this special assistance, jt must submit
convincing evidence that the loss seriously impacts the county's
economy, taking into account the county's tier ranking under
Rule .0701 of this Subchapter. The funding obtainable under this
emergency assistance category wil
not necessarily be
determined by the number of new jobs to be created, although countv which i s facing th e thr e at of or which i s e xp e ri e nc i ng a
the project should lead to new jobs, or save jobs, or both, and
help alleviate a jobs dislocation problem. The Secretan will
detennine the amount of funds for a project, up to the maximum
currently authorized for the program by NC General Statutes and
according to new job loss criteria expressed in the Statutes if that
has changed. This assistance will be jn the fonn ot"a jow interest
loan to the governmental unit, amortized over five years with
repayment beginning at the end of the second year.
icj UTILITY ACCOUNT— Within the jDF structure, the
Utility Account provides tlnancing to units of government for
jobs creation and investment jn the fier area(s). and for
benefiting finns currently authorized by NC General Statutes.
Funds may be used for construction or improvements to water.
sewer, gas, or electrical utility lines and equipment for existing
or proposed industrial buildings. There js no specific amount ot"
funding specified for each new job or project, but the impact ot'
the fundin g should lead to the creation ot' new jobs and new
investment. As with basic IDF financing, jt' Utility Account
funds are spent for public property, the assistance is a grant: for
private property, it is a loan.
AinhnriirG.S. I4}B-43~A.
major economic dislocation. A major e conomic dislocation
would m e an th e actual or immin e nt los s of manufacturingjobs
caus e d h\ on e or mor e plant closing(s) or one or mor e
announc e d plant layoff(s) which aff e ct:
f+4 at l e a s t 500 jobs: or
(^ a numb e r of job s which i s e qual to or e xc ee ds t e n
p e rc e nt of th e e xisting irianufacturing work force.
In th e ca se of Subparagraph (f)(2) of th e Rul e , th e numb e r of
jobs impact e d must e xc ee d 50.
(e) Eligible tier areas means the aggregation of North
Carolina counties into groups in which certain economic benefits
apply, as currently authorized by NC General Statutes.
(f) "Unit of Government" means a town, city or county of the
state.
(-fr) — "Proj e ct" m e an s one or more activiti e s propos e d for
funding, or for partial funding, und e r this Rul e . Such a proj e ct
r+H — b e d e scrib e d — in a narrativ e
and
d bv — a
accompam e
pr e liminary s e t of drawings which s e t out th e e xact factual
s ituation and a d e tail e d sch e dul e of costs from a contractor or ^
e ngin ee r Th e sch e dul e must const i tute an ability to compl e t e ~
such proj e ct with no mor e than a ten p e rcent cont i ng e ncy. All
such project mat e rial will prov id e evaluations of pot e ntial for
656
ISORTH CAROLINA REGISTER
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13:8
PROPOSED RULES
unusual sit e characteristics which might influence con s truction
or op e rating costs. In e ach ca se , the proj e ct d e scription will
docum e nt th e dir e ct r el ationship b e t^v ee n th e proj e ct and th e job s
created.
(o) "Full-time Job" means a job that requires at least 1600
hours of work in a vear.
(k) "R e novation" shal l have the same m e aning as proj e ct, as
described in Paragraph (g) of thi s Rul e .
(h) "Infrastructure" means utilities, typicalh referred to as
"public utilities." and in some cases a rail spur u here
there js public ownership of the raj] propert\.
fi4 "Secretary " m e ans th e S e cr e tar> of the D e partm e nt, or his
designee.
£ij "Grant" means mone^ given to a unit of government to pay
for an economic development project and does not have to be
repaid, if the terms of die grant are fulfilled, i.e. the jobs
commitment is met.
fH "Stat e " means the State of North Carolina.
tjj "Loan" means mone\ loaned to a unit of government to
pa\ for an economic development project, to be repaid by the
borrower based on an amortization schedule approved by the
Department.
(+t) "S e v e r e N Depress e d" counties m e ans thos e counti e s so
d es ignat e d under G.S. 105 130. 10(c) or G.S. 105 151.l7(c)or
units of governments within thos e counti e s.
(k) "Project" means an activit\ proposed for IDF funding. It
will be described narrativeh in an application and accompanied
by a preliminarN set of drawings, or sketches, or other data that
present the project in factual detail, together with a schedule or
itemization of costs from an engineer or contractor. The schedule
of costs shall constitute the ability to complete a project with no
more than a 10 percent contingency'.
fl-) Proj e ct e xp e nditur e s for e xisting buildings ma>
includ e :
iJj Project expenditures may include:
(JJ For basic IDF
(A) the construction of. or improvements to
e xisting water, sewer, gas or electrical utility
systems, distribution lines, or required storage
facilities, or a raH spur when either js publicK
owned and operated, and or;
the renovation of buildings to includ e including
(B)
(C)
structural repairs, structural improv e m e nts such
as roof r e pair, repairs , addition of docks, or th e
erection of walls, or sp e cial structural supports
te — support — cran es : for heavy equipment,
electrical upgrades, or HVAC upgrades;
improvements to th e building that are necessary
to make the a building suitable for the
occupancy of th e bui l ding by th e occupant and
the operator of the project. Such improvements
may include mechanical equipment such as
heating er and air conditioning equipment,
plumbing, pipes or trenching to handle
effluents or process yvater. special electrical
additions n e cessary for ov e ns, furnac e s or
oth e r proc e ssors and lighting. If a r e novation or
an improvement is critical to the operation of a
particular manufacturing or indu s tr i al
busin e ss es , business, or. if such improvements
afe or js critical to the decision making process
pertinent to the creation of sueh jobs, the actual
improvement need not be located on the site of
the i ndustrial main project building. If,
however, a grant of funds js involved, the
improvement must be constructed on public
right-of-way s or on property y\hich the unit of
government has an easement to treat as it
normally y\ould do as if it owned the property.
Hovsever. yshen extending infrastructure to a
Finn. IDF assistance ends at the private
property line. SfiW; in either situation, the
application must document the exact
relationship e4' betyveen the jobs and the
project. An example of a fundable project
would be the case yvhere a tlie unit of
government must construct an elevated yvater
tank and service wat e r lines to provide water to
a building so as to provid e sprinkler vy ator to a
building yvhere such service is directly required
to operate tlw an industrial or manufactur i ng
business. An example of an unfundable project
yvould be yvhere a unit of government seeks to
expand or to repair its y\ater utility (or other
infrastructure) system and yvhere the
relationship '.j the creation of jobs is fairly
general or indir e ct vague. The project yvill be
described +h — from the perspective of
employment to be created in th e and jts impact
ar e a of to the project. Dir e ct and indir e ct jobs
will b e tr e at e d separat e ly in th e di s cussion. Th e
operator of the project yvill provide d e tails as to
th e natur e of dir e ct jobs cr e at e d, including the
skil l s r e quir e d, work condit i ons, yvag e s paid
and s e asona l intlu e nc e s on th e numb e r of yvork
days p e r y e ar
fD-) th e installation of or purchase of manufacturing
e quipm e nt or proc e s s productions e quipm e nt.
(D) the purchase and installation of equipment that
js associated yyith the industrial classification
of the project.
(^ In th e case of counti e s d e signat e d as "s e v e r e ly
depressed". — proj e ct — e xp e nditures — may — includ e
construction of or improvem e nt to n e w or e xi s ting
wat e r, s e yy e r, gas, or e lectrical utility distribution lin e s
or e quipm e nt to se rve new or propos e d industrial
bui l dings to b e u se d for manufacturing and industrial
op e ration s . Such infrastructur e shall b e locat e d on th e
s it e of th e building or dir e ctly r e lat e d to th e sp e cific
manufacturing activity.
(2) For Emergency Economic Development Assistance -
Loans to local units of government for economic
dey elopment projects designed to create jobs, lead to
the creation of jobs, or save job s, and to assist jn
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657
PROPOSED RULES
ID
alleviating the economic dislocation created by the SECTION .0200 - GENERAL REQUIREMENTS
loss of jobs.
For the Utilit\ Account:
lAJ
LBJ
the construction of. or improvements to water.
seuer. sas or electrical utilit\ s\ stems.
distribution lines, or required storatie facilities.
org raU spur or rail line when either is publicK
owned and o perated, and or:
equipment for existing or proposed industrial
buildings for operations m the industrial
classifications that are currentK eligible to
recei\e Utilit^ Account funding within the tier
area.
(m) "State" means the State of North Carolina.
(n) "Application" means the pages of documents in which an
applicant for IDF funds identifies itself describes a project,
specifies the funds required. pro\ ides a breakdown of project
costs, and submits the benefiting film's commitment to create
jobs and evidence of" its credit worthiness.
(o) "Local Matching Funds" means funds of a unit of
go\ ernment contributed to an economic de\elopment project for
the purpose of assisting jn a total financing package and earning
(or winning) other funds by doing so. Matching js usualK
expressed as a ratio, i.e. one local dollar for three state dollars.
0" one for three.
"J "Local Matching Requirement." The Department requires
local matching in grant projects except for Emer genc\ Economic
Dexelopment Assistance projects and those located in a tier area
that has been exempted from matching b\ NC General Statutes.
The required rate will be one for three, or one local dollar for
each three state dollars.
(q) "Participation Loan" means a loan between at least three
parties, to wit: A bank or financial institution, the private firm.
and the unit of" go\ernment. The essence of" a participation loan
is that the bank, or financial institution, and the unit of"
government will share at least equalK in the lending
arrangements, meaning the mone\ loaned and the risk involved
and collateral shared.
(r) "Borrower" means the private firm identified in a
participation loan for building impro\ement or equipment hi the
basic IDF, or the unit of go\emment when the mone\ is spent
for emergencN economic dislocation assistance or when the
mone\ is reloaned in a utilit\ account project. AdditionalK. the
unit of government will be tlie borrower when IDF is used to
assist local matching, or in other cases when the Department
believes the project can be more prudentK structured as a loan
rather than a grant.
(s) "Preapplication Conference" means a meeting held at the
Department to discuss a proposed IDF application and includes:
a representative of Commerce Finance Center: the ap plicant: an
official of' the benefiting flmi: and a banker, if a participation
loan is involved. A preapplication conference mav be waived
when the total IDF expenditures are expected to be flft^
thousand dollars (S50.000) or less.
Auihurirv U.S. 105-129: N3B-I3'.4: 143B-43'.01.
.0201 DATE OF RECEIPT OF APPLICATIONS
The Department of Comm e rc e will receive applications after
November 15. 1987 on a first-come, first-serve basis. An
application Applications will be assigned a processing ease
number when that application it is received and is judged to b e
sufflcientlv complete for consideration. W h e r e When possible,
applications will be processed in the order of the processing
numbers assigned.
AuiborityG.S. !-l3B-43'.4.
.0202 APPLICATION CATEGORIES AND
REQUIREMENTS
(a) Applicants can app iv f or funding und e r diff e rent grant
cat e gories, including th e cat e gori e s of
<-4^ utilirv improv e ments or additions ov\n e d b\ public
bodi e s:
(3^ utility improv e ment s or addition s own e d b\ private
e ntiti e s:
f5-) industrial faciliti e s own e d b_v pub l ic bodi e s but b e ing
l e ased or b e ing improv e d for imm e diat e or d e lav o d
sal e to privat e op e rators, or to private "amis l e ngth"
landlords:
(-H industria l and manufacturing faciliti e s own e d bv
privat e "non profit" e ntiti e s such as "Communitv
D e v e lopm e nt Corporations" or Committ ee s of 100"
funded and or e ndors e d bv th e e l e ct e d l e ad e rship of
th e unit of Gov e rnm e nt: and
f?-) industrial and manufacturing faciliti e s owned bv "for
profit" entiti es to b e improved bv funds loan e d to th e
privat e "profit maldng" ontit> by a unit of citv or
count\ gov e rnm e nt.
(a) Applicants can appK for funding under different
categories, including:
UQ Basic IDF:
(2) Emergency Economic Development Assistance;
(3) The Utility .Account.
(b) TTiere is no set minimum grant amount of funding which
applicants mav request er to be awarded, if there are practical
difficulties about a small amount or cost disadvantages, these
vsill be discussed with the applicant in a preapplication
conference. GraHt IDF awards shall not exceed the total amount
sp e cifi e d appropriated bv the General Assemblv in its
appropriation process. Chapt e r 830 of th e IQ 8 7 S e s s ion Laws,
in S e ct i on 111. Paragraph (2), limit e d th e maximum grant to a
sum not to e xc ee d th e l e s se r amount the two hundr e d flft>
thousand dollars (S2-s0.000). or a total of twelve hundr e d dollars
(SI. 200) for e ach job cr e at e d. For basic IDF, per job or per
project maximum funding limitation will be the amounts
established under current law, as well as Emergency Economic
Development Assistance. There is no maximum set for LItility
Account funding: but the amount of awards will be determined
by the Secretary. For th e purpos e of this S e ction basic IDF. the
per job limitation will be impo se d applied on the basis of
requiring a comiiiiiment from the occupying industrial or
658
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
that position. Jf either an out-of-state bani< or a financial
institution other than a bank is used in a participation loan, that
must be approved b\ the Department.
(e) Also under basic IDF, jf funds are provided to a unit of
ao\ernment to accomplish a project apart from the uses
described under Paragraph (c) of this Rule, i.e. providing
matching funds, that ma\ be handled by a loan directh to the
unit of government. In this case the Department will furnish a
loan repa\ment schedule to the ma\or. cit> manager or county
manager, which, in addition to the award letter and application,
will establish the responsibilit\ for repayment, and times and
amounts of repayment.
(f) Loans for Emergenc\ Economic Development projects
will be accomplished as in Paragraph (d) ot" tins Rule.
(g) Loans for Utility Account projects will be accomplished
as rn Paragraph (d) of tfus Rule except for building
impro\ements or equipment tfiat tlie operator will own. In that
case, the loan will be a panicipation loan as in Paragraph (c)of
this Rule.
(h) With either grants or loans, the Department will require
i+1 — propos e a plan — of proj e ct — admini s tration — which — is financial infonnation from the project owner or operator to
establish financial capability. The usual requirement will be the
preceding three years" financial and operating statements: for
new businesses, at least three years pro fonna statements and a
business plan. ]n any case, the Department may use credit
reports, bank infonnation. or other data that it deems appropriate
to establish the credit worthiness of ttie borrower.
(i) A project will be subject to review b\' the Department at
an^ time during the first three vears after the project begin?
(j ) The Department may require a unit of government to
partialK or fulK accelerate loan repayments if the operator's
business has closed, moved, or if the company has not made
reasonable progress toward its jobs creation commitment. The
Department ma\ require repa\ment of a grant. partialK or fully.
if the operating compan\- has moved, closed, or fias not made
satisfacton progress towards its jobs creation commitment: and.
in the case of Emergency Economic Development Assistance or
the Utility Account, if funds are not spent in thie manner for
which thcN' were a pproved.
AiithorlnG.S. 1 43 8-43" A.
SECTION .0300 - SELECTION PROCESS
.0301 REVIEW OF APPLICATIONS AND FUNDING
(a) Applications will be submitted in a manner prescribed b>
the Department. Selection of applications for funding will be
based primariK on information contained in the application.
Thu s K th e application application, which must provide sufficient
information so as to allow the Department to rate it against the
s e l e ction approval criteria. When an application is deemed
complete, it will be assigned a processing ease number.
(b) Applications for funding of Em e rg e ncy Assistanc e
proj e cts may be submitted directly to the Secretary of the
Department. The\ ma> also be submitted to the Department's
Commerce Finance Center. Room 2 1 7 4 . Dobbs Build i ng. -1 30 N.
Sai i sbuiy Str ee t. Post Office Box 29571. 301 North Wilmington
manufacturing firm operator of the business as to the number of
jobs it will cr e at e that wjij be created over a reasonable period of
time, not to exceed three years. Th e number of jobs cr e at e d w i ll
includ e onK thos e p e opl e directh' e mploy e d in p e nnan e nt or
s e asonal jobs b> th e op e rator who occupi e s th e facilit> : indir e ct
and temporary jobs will not b e includ e d . Those will be
permanent, full-time jobs: no temporan, or contract jobs.
(c) Wh e n a proj e ct r e novation or improvement i s to b e
accompli s h e d to a building or on a sit e own e d by a privat e e ntity,
wh e th e r th e privat e e ntity i s conduct e d on a "for profit" or on a
"not for profit" basis, th e project vh ill b e financ e d by a loan to
that privat e e ntit\. This loan will b e mad e to th e privat e e ntit\ by
the l ocal unit of gox e mm e nt \sith funds mad e a\ailabl e from thi s
program. In e ach case, th e l oca l unit of gov e rnm e nt will
e stablish its own authority to do that financing. Th e applicant
will r e quir e and provid e to th e D e partm e nt of Comm e rc e
satisfactory docum e ntation that all co s ts ar e r e asonab le and that
all funds ar e to b e e xp e nd e d with r e gard to th e conflict of
interest — statut e s — r e gulating — busin e s s — tran s actions — between
gov e rnm e nt officials and oth e r involv e d parti e s. Th e applicant
sati s factory for th e D e partm e nt of Comm e rc e .
fd^ — All funds e xp e nd e d which dir e ctlx assist participating
privat e e ntiti e s must b e r e paid to grant r e cipi e nts and th e n
return e d to th e D e partm e nt of Comm e rc e as such r e paym e nts ar e
receiv e d. Such r e paid funds w ill not b e r e turn e d to th e G e n e ral
Fund, but s e t asid e to fund n e w proj e cts approv e d und e r this
Subchapter. G e n e rally, proj e ct grant s classifi e d und e r Ru le
.0202 (a) (I) wi l l not b e r e paid. R e paym e nt for proj e cts
oth e rwi s e classified — Ftw. — b e giv e n — subordinat e — collat e ral
positions, int e rest costs which ar e at l e ss than mark e t rat e s, or
amortization which d e fers cash flow, in so long as r e quests are
docum e nt e d as n e c e ssary to the creation of jobs and th e s ucce s s
of th e proj e ct.
( e ) A proj e ct will b e subj e ct to r e vi e w b> the Department of
Comm e rc e at an> tim e during th e first thr ee y e ars aft e r th e
project b e gin s . For a proj e ct classifi e d und e r Rul e .0202 (a) (2)
(3) ( 1 ) and (5) of this Rul e , any r e payment balanc e that it ow e s
th e local unit of gov e rnm e nt max b e partialK or fulK acc e l e rat e d
if th e bu s in e s s has clo se d, or if th e op e rating compan\ ha s not
mad e r e asonabl e progr e s s toward s its jobs cr e ation goal.
(c) The Department may authorize a local unit of government
that receives IDF funds to use ug to two percent of tlie funds to
verify that expenditures are made in accordance with the law and
rules and to otherwise administer the IDF project.
(d) Under basic IDF, improvements to building properties and
equipment purchases (either of which becomes private property)
will be loan projects and will be accomplished w ith participation
loans. The three parties to a participation loan will be: the
borrower's North Carolina bank, the borrower, and the unit of
government. The bank and the unit of government (using IDF
funds) v^ill be at least equal participants, sharing equalK in the
funds provided and in the risk and collateral involved. The bank,
however, may supply more money than just matching IDF: in
this case, the bank's p ro rata share is simply larger. Also, in the
matter of sharing equally, this means that it' the bank takes a
certain collateral position, the unit of government yvill share in
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NORTH CAROLINA REGISTER
October 15, 1998
659
PROPOSED RULES
Street. Raleigh. North Carolina 27 611 . 27626-0571. The
Department will maintain a polic\ that applications be approved
or denied b\ the last day of the calendar month following
assignment of a processing ease numb e r a s s e t out in Rul e
. 2 1(Q). number. When possible, applications will be processed
in the order that ease processinu numbers are assigned.
AuthoritvC.S. N3B-43'A.
.03(14 ELIGIBILITY REQ/EMGY ASST PROJ
DEFINED/RL'LE .0102(h)
Application for Em e rg e nc\ Assistanc e proj e cts defined in
Rul e .0102(h) will show that:
f4-) th e e conomic e m e rg e ncy e xists, or is imminent, and
(3-) th e proj e ct will, or will t e nd to. all e viate the ospcciall>
s e v e r e e conomic e m e rg e ncy caus e d by th e d e scrib e d
economic dislocation.
.0302 ELIGIBILITY REQUIREMENTS
Applications will show that:
(1) -fh&i this funding is a vital part of the proposal to
create the jobs set out and that the jobs will not be
created if the project goes unfunded, and
(2) That the project is completelv funded or financed,
except for the particular funds sought in the
application, and
(3) The the involvement of the local unit of government
is formal K authorized bv its elected board under
specific resolution and b\ specific State Statute, and
(4) TTte the participating private entitv' must provide a
fetter statement of commitment relating to the project.
That l e tt e r commitment w ill state that the project is to
be carried out as described in the application, with
specificit> as to time schedules and to the parties
involv e d, involved.
( 5 ) the expenditure of private monev on the project has
not begun, and
(6) the project has not vet begun, i.e. monev spent on the
project, or public announcements made that the
benefiting firm plans to do the project before the
Department has been requested to participate with
IDF.
(7) for Emergency Economic Development Assistance
Projects, there exists an emergency in the economy
large enough to be considered an economic
dislocation as set out jn G.S. 143B-437A. and
(8) The project for which funding is sought mi ght help to
alleviate the economic emergency described in
Subparagraph (7) of this Rule.
Aiahortn- Section 111 at Pun XXII Chapter 830. 198' Session
Laws.
.0303 REVIEW: APP/FUNDING/EMGCY .ASST PROJ
DEFINED/RULE .0102(h)
Authorit}- Section IX of Chapter '54. 1989 S.L
SECTION .0400 - APPROVAL CRITERIA
.0401 GENERAL
In ord e r for th e D e partm e nt to approv e a proj e ct, or an
"Em e rg e ncy Assist e nce proj e ct"", th e S e cr e tary is r e quired to
mak e — c e rtain — findings — nec e s s ary — te — docum e nt — that — the
D e p a rtm e nt is conducting th e duti e s sp e cifical l y giv e n to it in
Chapt e r 830 of th e 1087 S e ssion Laws, thos e duti e s e xpr e ss e d
in oth e r G e n e ral Statut e s, and in Rul e .0 4 02 of th e s e procedur es ,
in a r e sponsib le and prud e nt mann e r.
Authority Section 111 of Part XXII Chapter 830. 198' Session
Laws: Section IX of Chapter '5-1. 1989 S.L.
.0402 REQUIRED FINDINGS
(a) Before the Department can b e gin to make the approval as
sp e cifi e d in G.S. Chapt e r 830. approve a project, a finding must
be made that the project:
( 1 ) Will will assist a unit of Government in one of the
most e conomically d e pr e ss e d counti e s eligible tier
areas of the State: Stat e as m e asur e d b> m e dian p e r
capita incom e , and
(2) The the funds will be used for renovation of buildings
buildings or infrastructure or equipment to be us e d in
manufacturing and industrial operations currently'
e ligibl e und e r NC G e n e ral Statut e s by firms that have
industry classifications currently eligible for tax
incentives under G.S. 105-129.
(b) The s e cr e tary Department y\ill docum e nt, document a
finding based on data provided to him e ith e r in the application
or by staff research, that the jobs to be created bv this a proj e ct
project, over no more than a three year period, will be large
enough in number to have a measurable favorable impact on the
area immediately surrounding the project and will be
commensurate v\ith the size and cost of the grant to the project.
Applications for funding for proj e cts d e fin e d in Rul e .0102 (h) The D e partm e nt will us e as a guidelin e , a standard of requiring
will show that: on e job sav e d or g e n e rat e d for e ach on e thou s and two hundr e d
fH There exists an e m e rg e ncy in the e conomy' larg e do l lars ($1,200) in grant financing. The applicant has the burden
of demonstrating that the jobs w ill have a measurable impact on
the county. The applicant must show by clear and convincing
evidence the number and type of such jobs generated.
(c) The s e cr e tary Department will make a finding that the
operator of the proposed project has demonstrated the
capabilities to operate such a facility. The applicant has the
burden of showing that capability exists in the operator to
operate and maintain the facility efficiently and effectively.
e nough to b e consid e r e d an e co no mic dislocation a s
s e t out in G.S. I I3B 137(d) and.
{¥> That th e proj e ct f o r vyhich funding is sought might
h e lp to alley iat e th e e conomic e m e rg e ncy d e scr i b e d i n
Subparagraph (1 ) of thi s Rul e .
Authority Chapter '54. 1989 S.L.
660
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
Financial strength and prior related experience by the operator
will be give n groat weight, evaluated. Where little or no prior
experience can be demonstrated, the qualifications of
management, including production or engineering staff, as
applicable, will be of great prime significance.
(d) The secretary' Department will make a finding that tlie IDF
financing of such for a project by the authority will not cause or
result in the abandonment of an existing similar industrial er
manufacturing facility of the proposed operator of an affiliate
elsewhere in the state unless the facilitv' js to be abandoned
because of obsolescence, lack of available labor, or site
limitations. The Department shall consider an abandonment
statement as prima facie proof of lack of abandonment.
( e ) Th e D e partm e nt shal l us e th e d e finition s of t e rms found
in S e ction .0200 of thi s Subchapt e r to mak e th ese findings.
(e) For Emergency Economic Development projects, the
Department \\\\\ make a finding that:
( 1) the economic emergency exists, or is imminent, and
(2) the project will, or w ill tend to, alleviate the especially
severe economic emergency caused by the described
economic dislocation.
£f) For Utility Account projects, the Department will make a
finding that the proposed funding should create new jobs or
reasonably be expected to lead to the creation of new jobs in the
industries currently eligible for Utility Account financing
assistance as specified in NC General Statutes.
(g) The Department shall use the definitions of tenns found
in Rule .0102 of this Subchapter to make these findings.
Authority <J.S. 1438-43'^ A.
.0403 FORMAL APPLICATIONS PROCEDURES:
DENIAL
(a) Unless the applicant has met its various burdens of proof,
the secretary Department shall not make hts the required
findings.
(b) All findings shall b e i n writing and wh e r e Where adverse
findings are made, they shall specifically indicate in detail which
elements of proof were weak, the required conclusions which
could not be mad e made, and any suggestions for amending the
application.
AiithoritrG.S. N3B-43^A.
DEFINED/RULE .0102(h)
(a) B e for e th e D e partm e nt can b e gin to mak e th e approval of
and to fund an Em e rg e ncy proj e ct as d e fin e d in Ru l e .0102(h),
the Secr e tary will determine that th e e conomic dislocation
describ e d has caus e d an e conomic e m e rg e ncy and that th e
e m e rg e ncy is of such s i z e that e xtraordinary m e asur e s ar e
r e quir e d to h e lp all e viat e th e e m e rg e ncy.
fb^ — That th e funding for Em e rg e ncy projects during the
curr e nt budg e t has not.
fe-) — Ev e n with th e funding for th e Em e rg e ncy proj e ct so
approv e d, will not exceed one hundr e d thousand dollars
($100,000.00).
Aiithorm- Section IX of Chapter 754. 1989 S.L
SECTION .0500 - RESERVATION OF FUNDS
.0501 GENERAL
Units of government may apply for a "430 45 day reservation"
of funds, relating to a particular building r e novation, so as IDF
project to a l low local units of government to induce prospective
private sector employers to locate or expand and thu s ly, to create
new jobs. The Secretary Department may accept and approve the
requests where local units of government earn can document
that:
( 1 ) Docum e nt that they have the potential for a project of
strong merit:
(2) Wh e r e a particular employer is interested in a
proposed industrial building;
(3 ) Wh e r e strong competitiv e offers have been made to
#H? a client ifi by other states or wh e r e mor e
comparative propo s als have b ee n — mad e to th e
potential employ e r by communities located in the least
distress e d counti e s, tier areas not currently eligible for
IDF funding. That application wou l d b e A request
will be prepared along the lines of the application for
approval described in Rule .0302 of this Subchapter,
except that the data normally obtained from the client
or potential employees would not fee necessarily be
prepared by the client and would not be required in
such detail.
AiithorinG.S. 143B-437A.
.0404 FORMAL APPLICATION PROCEDURES:
APPROVAL
(a) Where the S e cr e tary Department makes all the findings
necessary, he jt will do so in writing to the applicant at the
earliest possible date after follow ing the procedures as set forth
in this Subchapter.
(b) The S e cr e tary' Department will prepare a letter of approval
in which all his find i ngs a s s e t forth and cause this letter to be
mailed to the applicant.
Aiithorit}-G.S. 143B-437A.
.0405 FINDINGS REQ/APPROVAL/EMGCY PROJ
.0502 LIMITATIONS
Such approvals Approvals to requests may be made in so long
as that the "reservation of funds" for that a project will not cause
the total program funds "reserved" in that manner to exceed a
sum not larg e r than an amount e qual to one third one-half of the
total of program funds available and not previously committed.
committ e d in th e r e gular approval proc e ss. The total of
programs funds not previously committed will include
appropriated funds, those funds received in repayment from
recipients, interest earned, accrual in e scrow accounts and funds
not used and reverted from either approved projects or from
"reserved" funds.
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NORTH CAROLINA REGISTER
October 15, 1998
661
PROPOSED RULES
AmhorinG.S. I43B-43'A.
.0503 REVERSION OF FUNDS
An appro\al for "reser\ation" of funds for projects will not
predicate appro\al or funding €4" a project. When a formal and
complete application for appro\al of a project has not been tiled
b\ the applicant that requested the reser\ation of funds, before
the expiration date of the "reser\ation of funds", the Department
ma\ re\ert those funds back to the program without an\
obligation to the unit of go\emment. Such r e v e r s ion of funds
will b e communicat e d to th e unit of gox e rnm e nt in writing. It
shall be the responsibilit^ of the unit ot" gowmment to keep track
of when the reser\ation of funds e.xpires.
AuihoriryG.S. 1 453-43' A.
SECTION .0600 - REPORTING REQLTREMENTS
.0601 REPORTING REQLTRE.MENTS
(a) Th e Department of Comm e rc e will r e port annually to th e
Gen e ral AssombK conc e rning th e applications made to the fund
and th e pa\m e nts mad e from th e fund and the impact of th e
pQ\m e nts in th e targ e t e d counti e s. This r e port will b e fil e d
annualK with th e General ;\GsembK either at the expressed
conveni e nc e of th e Hous e and th e S e nat e or b> March 1 of each
x e ar at th e offic e s of th e Lt. Go\ e mor and th e Sp e ak e r of th e
Hous e .
fb4 — The Departm e nt o^ Commerc e will also til e monthK
reports with th e Joint L e gislati\ e Commission and th e Fiscal
R e s e arch Di\ ision. Th e s e r e ports will comm e nc e on Noxember
30. 1087 and s hall nam e th e parn(s) to whom pa\ments w e r e
mad e , in what amounts, and. for what purpos e s.
Authority Section 111 of Pan XXU Chapter 830. 198' Session
Lm\s.
SECTION .0700 - DESIGNATION OF QUALIFIED
COUNTIES
.0701 DESIGNATION OF THE FIFTY MOST
ECONOMICALLY DEPRESSED COUNTIES
Each > e ar. on or b e for e D e c e mb e r 31. th e Secretary of the
Departm e nt of Economic and Communitx D e v e lopm e nt shall
d e signat e th e .^0 most e conomicallx d e pr e ss e d counti e s in th e
stat e : this d e signation s hall b e for th e following calendar \ear.
Each \ear. on or before December 31. the Secretarx of the
Department of Commerce shall rank each of the 100 counties of
the state according to criteria currentK set by NC General
Statutes. The highest numericalK ranked count\ shall reflect the
most adverse economic data, whereas the lowest ranked count^
shall retlect the most favorable data. This listing of all counties
shall then be divided into groups or tier areas. The Secretarx'
shall designate at that time those counties and their tier areas that
are eligible to participate in the Industrial Development Fund
using the priorin specified under current statutes. This
designation ]s effective for the following \ear: however, a Tier
One county retains its designation for at least two consecutive
years.
Authorities. 105-129.3.
SUBCHAPTER IK - ECONOMIC DEVELOPMENT
ACTIMT^ OF THE COMMUNITY
DEVELOPMENT BLOCK GRANT PROGRAM
SECTION .0100 - GENERAL PROVISIONS
.0101 PROGRAM PURPOSE AND OBJECTIN E
The purposes and objectives of the North Carolina
Communitv Development Block Grant program are set out in
full in the North Carolina .Administrative Codes Title 4.
Subchapter I9L. as promulgated b\ the Division of Community
.Assistance of the Department of Economic and Community
Development. Commerce . While the Di\ ision of Community
.Assistance is the lead agencv for the Community Development
Block Grant Program, the Commerce Finance Center is
responsible for the administration of th e Economic D e v e lopment
program and activities conducted as under the Economic
Development section of that program. Economic Development
projects and grant activities consist of projects which directK
cr e at e or r e tain support the creation or retention of jobs,
principallv for persons of low and moderate incom e . famiK
income (LVll) status. The major guideline requires that 60
percent of jobs created or r e tain e d will be heW filled b\ persons
with LMI status who qualified as p e rsons of low and moderate
income wh e n th e \ wer e prior to being hired b\ the Emplo\ e r.
Employer, or who are documented as having LMI status at the
time of project application [n the case of retained jobs. Such
creation of jobs must tak e place within th e grant p e riod. If at
an\ time during the grant period the percentage of jobs held by
persons who qualified as low and mod e rat e incom e LMI when
hired drops below 5I°o of the jobs retained or created, the
beneficiarv or beneficiaries and the grantee vv ill be directly liable
for repayment of the grant. All CDBG expenditures which
directly assist participating priv ate businesses must be provided
as loan funds, and be returned to the D e partm e nt, repaid under
terms established at the time the program funds are awarded to
the local government grantee. Certain other program income, or
a portion of other program income, such as connection fees,
acreage development fees, or consideration receiv ed for the sale
of public utilities to private concerns or regulated utilities will be
considered as money that will be returned to the CDBG
Economic Development Program and used to finance other such
Economic Development projects. On e e xampl e of such a
situation would b e wh e n CDBG Economic D e v e lopm e nt mon e y
is originally us e d to fmanc e a gas line own e d bv a cifv or county.
and th e gas line is th e n acquir e d by a r e gulat e d natural gas
distributor. Some n e gotiat e d portion of the acquisition cost paid
by th e privat e utility would th e n b e r e turn e d to the state and used
to financ e oth e r utiliti e s e xt e nsions such as natural gas lin e s to
other e mploy e rs of low and mod e rat e incom e p e opl e .
Authority G.S. 143B-431:
5-0.494: 42 U.S.C.A. 5301.
:4 C.F.R. 5-0.489: 24 C.F.R.
662
.\ORTH C.4ROLIX4 REGISTER
October 15. 1998
13:8
PROPOSED RULES
.0102 DEFINITIONS
(a) "Act" means Title I of the Housing and Communirv
Development Act of 1974, P.L 93-383, as amended.
(b) "Applicant" means a local government which makes
application pursuant to the provisions of this Subchapter.
(c) "CDBG" means the State administered Communit>
Development Block Grant Program.
(d) "Chief Elected Official" of a local government means
either the elected mayor of a cit\ or the chaimian of a countv
board of commissioners.
(e) "Communit> Development Program" means the program
of projects and activities to be carried out by the applicant with
funds provided annualK under this Subchapter and other
resources.
(f) "HUD" means the U.S. Department of Housing and Urban
Development.
(g) "Local Government" means any unit of general erty
municipal or county government in the State.
(h) "Low-Income Families" means those with a famiK income
of 50 percent or less of median-family income. For purposes of
such ternis. the area involved and median income shall be
determined in the same manner as provided for under the Act.
(i) "Moderate-Income Families" means those with a family
income greater than 50 percent and less than or equal to 80
percent of median-family income.
(j) "Low and Moderate Income Persons" means members of
families whose incomes are within the income limits of low and
moderate income families as defined in Paragraph Paragraphs
(h) and tU of this Rule.
(k) "Metropolitan Area" means a standard metropolitan
statistical area, as established by the U.S. OtTice of Management
and Budget.
(1) "Metropolitan City" means a citN as defined b\ Section
102(a)(4) of the Act.
(m) "Department" means the North Carolina Department of
Economic and Community D e v e lopm e nt. Commerce (DOC) .
(n) "Project" means any Indu s tria l Proj e ct or Industrial
Proc e ssing Facility eligible business as defined in Paragraph (o)
of this Rule and which the Economic Development Grant sector
of the CDBG Program ma\ consider so long as th e > ar e
se parab le , id e ntifiabl e and dir e ct l y cr e at e or retain jobs, the
project business (or businesses) presents separate, identifiable
opportunities to create or retain jobs. principalK for low and
moderate income people. Such jobs must be created within the
grant period.
(o) "Industrial Project" or "Industrial Proc e ssing Facil i ty"
shall m e an any land, e quipment or any buildings or oth e r
s tructur e s, wh e th e r or not on the sam e sit e or sit es , and any
r e habilitation, improv e m e nt, r e novation or e nlarg e m e nt of or
any add i tion to, any building or s tructur e for us e as or in
conn e ction with any: The follow ing definitions apply regarding
eligible business types for projects for which CDBG assistance
is requested:
f44 i ndustr i al proj e ct for indu s try, which proj e ct may b e
an\ indu s trial or manufacturing factory, mi ll ass e mbly
plant or fabricating plant, or fre i ght terminal, or
industrial r e s e arch d e v e lopm e nt or l aboratory facility.
or indu s trial proc e ssing facility or distribut i on facility
for indu s trial or manufactur e d products; or
( 1 ) All business types identified as eligible for New and
E.xpanding Business tax incentives under the North
Carolina William S^ Lee Quality Jobs and Business
Expansion Act (G.S 105-3A). as amended; and
(3^ any pollution control proj e ct for industr> or for publ i c
utiliti e s which proj e ct may b e any air pollution control
facility, wat e r pollution control facility, or s olid wast e
disposal facility in conn e ction with any factory, mill
or p l ant described in Subparagraph (p)(l) of this Rul e
or in conn e ction with a public uti l ity plant; or
{i) any — combination — of — proj e cts — m e ntioned — m
Subparagraphs (p)(l) and (p)(2) of this Rule. — Am
proj e ct may includ e all appurt e nanc e s and incid e ntal
faciliti e s — s«eh — as — land. — h e adquart e rs — or — offic e
faci li t ie s. war e hou ses , di s tribution c e nt e rs, sid e walks,
utiliti e s. — railway — s idings. — trucking — and — similar
faciliti es , parking faciliti e s, landing strips and oth e r
faciliti e s for aircraft, wat e rways, docks, wharv e s and
oth e r improv e m e nt s n e c es sary or conv e ni e nt for th e
construction, maint e nanc e and op e ration of any
building or s tructur e , or addition th e r e to.
(2) Other project businesses that provide public benefit
and can reasonably be inter preted as being eligible for
CDBG assistance under sections 105(a)( 14) and
105(a)(17) of the Housing and Community
Development Act of 1974. as amended. (Also see
Rule .0105 of thjs subchapter regarding projects not
to be considered for funding in NC)
(p) "Utility Project" shall mean any water, sewer, electric or
natural gas utility improvement needed to provide services to the
economic development project. The applicant shall delineate
which projects are to be owned and operated by a unit of
government, which projects are to be owned by a unit of
government and leased to an operating utility company, and
which projects are to be owned and operated by a private utility
company. Wh e n e v e r a utilit\ proj e ct i s own e d b\ a unit of
gov e rnm e nt and l e a se d to a privat e utility op e rator, th e r e will b e
a determination b\ th e applicant as to th e point and tim e wh e r e
th e utility proj e ct s hal l b e acquir e d b\ th e privat e op e rator. At
that tim e , the proj e ct s hall be acquir e d by th e privat e op e rator
onc e it has grown or d e v e loped to th e point that it has what
would b e d e t e nnin e d a s comm e rc i a l proj e ct f e asibility". Th e
purpos e of this d e lin e ation will b e to hav e such utility proj e cts
produc e Ad Valor e m tax incom e for th e local un i ts of
gov e rnm e nt and add i tional mon e y to b e us e d by th e Stat e for
n e w e conomic d e v e lopm e nt faciliti e s. If the project is for
infrastructure which will be leased to and maintained by a
privately owned and regulated natural gas distributor, the
application will state the terms of the lease between the unit of
government and the private entity. Such stated terms must
include provisions as follows:
( 1 ) natural gas lines constructed will be constructed to the
safets requirements maintained b\ the distributor, and
{¥) th e pr i vat e e ntity wi l l r e m i t l e as e paym e nts annual l y
to the unit of governm e nt e qual to any mon e ys which
13:8
NORTH CAROLINA REGISTER
October 15, 1998
663
PROPOSED RULES
would — normalK — hav« — r e pr e s e nt e d — a — r e turn — te
stoclcholders on lines constructed und e r normal
busin e ss conditions, and
(4-) th e private entit> \sili annual!} det e rmin e if th e l e as e d
line has a positiv e n e t pre s ent \alu e . and wh e n that
d e t e rmination i s made, th e privat e e nlit_\ will within
90 days purchase the l e ased lin e at its cost of
construction and.
H4 th e unit of gov e rnm e nt will return thos e privat e
mon e ys — te — the — D e partm e nt — of Economic — afid
12}
OJ
determined bv the amount of (HUD) monev received
in an\ one funding > ear: and
(2) maximum dollar amounts for e ach project, the State-
HUD approved program statement of operation for
each respective CDBG program vear. Those program
and project maximums are specifically set out jn the
Grant .Agreement between the state and HUD and in
the official program statement issued by the State and
approved b\ HUD.
(b) This Rule will s e t both program and proj e ct maximum
Community D e v e lopm e nt and then to an e conomic dollar limits shall b e thos e s e t out in the e ff e ctiv e and approved
d e v e lopm e nt rotating fund s e t up to financ e n e w
natural ga s lin e s for industry or industrial proc e ss
us e rs which wil l cr e at e or retain job s for North
Carolina citizens.
the natural gas distributor will calculate annually, m
January of each vear. the Net Present X'alue INPV) of
the project gas facilities according to the X C
Depunmenr of Commerce CDBG Prosram Policy z
Resale of Gas Lines of June. 1994. as amended. If the
calculation of the NPV is positive, the unit of local
gov ernment that was awarded CDBG funds for the
project is obligated to seii and tlie natural gas
distributor will, subject to ifie approval of tfie North
Carolina Utilities Commission (NCUC). purchase the
facilities at thie depreciated book value (computed
using the depreciation fomtula most recently allowed
by the NCUC for that natural gas distributor for
similar facilities).
In the case of such sale, the unit of local government
will return to ifie DOC for deposit in an economic
development revolving fund the proceeds of the sale.
less such appropriate direct expenses, such as legal or
advertising fees, that the unit of government expended
in the execution of the sale.
grant agr ee m e nt from HL D and the approved Official Stat e m e nt
from th e Stat e of North Carolina. — If proj e cts have suffici e nt
m e asurabl e impact and comm uni ty b e n e fits, e sp e cially to low
and mod e rate incom e p e opl e , both citv and countv gov e rnm e nts
with jurisdiction ma> apply — for s e parat e proj e ct grants in
amounts up to th e p e rmitt e d maximum e conomic d e v e lopment
Proj e ct limitation. .An e xampl e of th i s situa tion would b e wh e n
a city applies for a grant to build a wat e r tank for a prosp e ctiv e
e mploy e r and a countv appli e s for a grant to build a natural gas
lin e for th e sam e e mploy e r. Each gra nt mav be in amounts up to
proj e ct limits but it should b e not e d that such a proj e ct must hav e
suffici e nt b e n e ficial impact to Justify th e total commitment of
funds,
(c) "Suffici e nt b ene ficial impact" v\ill b e m e asur e d bv :
(4-) obs cr e ated or r e tain e d, e sp e cially — for low — and
mod e rat e incom e p e ople:
(2-) r e v e nues f or un i ts of governm e nt: and
fj^ solutions to local e conomic program d e velopment
n ee ds and probl e ms. Th e r e lativ e dollar d e mands of
p e nding proje ct s
b e compar e d to communirv
b e n e fits and communirv hardships or distr e ss wh e n
worthy applications e xc ee d fund availability.
AiiihonnG.S. 143B-43I: 24C.F.R. 5'0.489: 42 i.S.C.A. 5301.
AiilhonnG.S. 105-3A: 143B-43I: 24 C.F.R. 5'0.489.
.0103 ELIGIBLE .APPLICANTS
(a) .All counties except those designated as urban counties and
all cities except those designated as entitlement cities or urban
county cities may be applicants under this Economic
Development Program.
(b) Eligibility to submit an application shall depend upon an
applicant's atidH — history of administ e ring its prior HUD
programs and its curr e nt participation in proj e cts which ar e
fund e d from th e curr e nt annual grant award from HUD.
satisfactory administrative performance with present or prior
CDBG program projects. .A letter of certification of eligibility
from the Div ision of Community .Assistance shall be ev idence of
eligibility.
AiiihontxG.S. 143B-431: 42 i.S.C.A. 5301.
.0104 FUNDING LLMITATIONS
(*t Economic Development Grant awards are limited bv:
( 1 ) maximum dollar amounts for each unit of gov ernment
.0105 PROJECTS NOT TO BE CONSIDERED FOR
FUNDING
(a) Projects that have evidence of prior major financial
commimtent bv the local government applicant or the proposed
project business. .After an operator or beneficiary becomes
economically committed to a project, it shall not be eligible for
funding and the unit of government shall not be eligible to
request anv funding assistance to serve that project with utiliti e s.
utilities or CDBG loan assistance. "Economic commitment" is
not a quantitative measure, but those tvpes of prohibited
situations shall include the following:
( 1 ) when construction contracts hav e been signed:
(2) when equipment purchase orders for site specific
installations have been issued:
(3) when true, simple options for the purchase of an
existing facility are bound with deposits that are so
large that the option constitutes a sales contract:
(4) when conditions or contingencies in a contract of sale
have all been met: or
(5) when public announcements include no expression of
the need for CDBG participation. As provided in a
664
.\ORTH C.4ROLL\.4 REGISTER
October 15. 1998
13:8
PROPOSED RULES
£3}
14}
15J
governing board for the unit of government, or an authorized
d fiign ee and designee, a corporate official, or authorized
designee, from the employer or b e n e ficiary, project company .
In addition, invite e s to th e pr e appl i cation conf e r e nc e must
includ e th e Community Assistanc e Division, th e Divi s ion of
Environm e ntal Manag e m e nt, th e a staff m e mber from the
R e gional Official from of th e Busin e ss/Industry Division, th e
Environm e ntal Sp e cialist in th e Busin e s s /lndustr> Division^ and
th e a r e pr e s e ntativ e from th e Local Gov e rnm e nt Commission.
and a representative from a participating bank zi if the proposed
project will involve a loan and a bank has been selected .
(c) The purpose of the conference is to ensure that the
application procedures are clearly understood so that the
application. v\hen acc e pt e d, will be complete complete , th e r e by
short e ning the application p e riod as much as pos s ibl e , when
submitted and aH parties involved will be made aware of the
application process and its anticipated time frame.
(d) The operator shall offer written project descriptions
whenever possible and will be encouraged to provide data
relative to the character and volume of process wastes, water and
air discharges of pollutants, as well as any comment or permits
already received from the Division of Environmental
Management.
(e) The applicant will provide documentation of the first
f e d e rally required program public hearing if such a public
hearing has been held w ithin the provisional 12 most recent six
months.
(0 Anoth e r purpos e of this conf e r e nc e will b e to r e ach an
und e rstanding among all parti es that th e proj e ct is of the typ e
Aiithohn- G.S. 143B-43I: 24 C.F.R. 5''0.489: 42 U.S.C.A. 5301. that may b e consider e d for approval and funding by th e
Sf cr e tarv'. The Department will make net no d e cisions, how e v e r
t . - ntative. funding decision regarding a prospective project prior
to a full consideration of the completed application. However,
the Commerce Finance Center may issue a Letter of
Encouragement or a Letter of Concerns if so requested by the
unit of government. This letter will convey comments pertinent
to the project and the preparation of the application and will
enumerate an\ points of concern which are developed as a result
of the information made available at the conference. These
points of concern will be generated so that the applicant's
response may include pertinent facts and data. The issuance of
a letter of encouragement will not preclude the Secretary or the
Commerce Finance Center from raising new questions or areas
of concern after an application is received.
later section, a unit of government may request a letter
of non-prejudice to solve this problem.
(b) Proposed projects that are specifically prohibited by
current State and HUD rules due to lack ot" public benefit and
potential failure to meet required program objectives. Examples
of such projects include those that would:
( I) provide general, non-specific promotion of a
community as a whole;
assist professional sports teams:
assist privatelv-owned recreational facilities that
would serve a predominantly higher-income clientele,
where such recreational benefit clearK outweighs
employment or other benefits to LMI persons:
acquire land for which no specific purpose has yet
been identified: or
assist a for-profit business while that business or any
other business owned b\ the same person, persons or
entity js the subject of unresolved findings of non-
compliance relating to present or previous CDBG
assistance provided b\ the applicant.
In ord e r to pi - vide local un i t s of gov e rnm e nt s with a tim e and
m e thod of tran s it i on, any project which has been revi e w e d in a
pr e application conf e r e nc e and has been th e subj e ct of a
favorabl e L e tt e r of Encourag e m e nt will b e grandfath e r e d a s to
e ligibility unti l D e c e mb e r 31. IQ02. If th e proj e ct will not b e
compl e t e d by that dat e th e grant shall b e r e writt e n to r e fl e ct a
practical c l osing dat e and th e Comm e rc e Financ e C e nt e r s o
notifi e d by r e gist e r e d mail.
SECTION .0200 - APPLICATION PROCEDURE
.0202 PRE-APPLICATION CONFERENCE
(a) Local units of government are encouraged to advise the
Department when they enter into serious consideration of an
economic development project which may lead to an application.
The Department will assist the communirs as requested within
the limits of available resources. Docum e ntation. Technical
advice, liaison and coordination will be effected by the
Department through the Commerce Finance Center Available
services include:
(1) fomis and documents relating to the application
process w ith informative comments.
(2 ) comm e nt advice on the t>pe of projects consummat e d
by oth e r authoriti es , that are considered eligible for
CDBG program assistance.
(3 ) examination of and comment on. assembled facts and
data which might be used in the preparation of
application, and
(4) analysis of approach to likely or potential procedural
or environmental problems.
(b) At l e ast on e w ee k prior Prior to submission to the
Department of a project application, the unit of government shall
arrange for a pre-application conference with the Commerce
Finance Center Parties whose presence are required at the pre-
application conference shall include a member of the elected
Auihority G.S. I43B-43I: 24 C.F.R. 5-0.489: 24 C.FR.
570.496.
.0203 APPLICATIONS
Each Applicant that proceeds with a formal application shall
take the following steps:
(I) It is suggested but not required that the applicant
employ or designate an application preparer and
service provider for its application. If applicable,
federal procurement guidelines will be followed.
Documentation of compliance or non-applicability
will be provided to the Commerce Finance Center.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
665
PROPOSED RULES
(2) The applicant is encouraged to proceed with three
critical areas of the application as follo\ss:
(a) the environmental assessment, or the state
clearing house hou se , review process.
(b) the detemiination of Da\ is-Bacon applicabilitv
and the pertinent wage decision, and
(c) the second project specific public hearing.
f^ Bas e d on th e salisfactorx compl e tion of the three
cr i tica l e l e m e nts in It e m (2) of this Rul e and th e actual
s ubm i ssion of th e app l ication to th e D e partm e nt, th e
unit gov e rnm e nt max — r e qu es t a letter of "Non
Pre j udi ce". In that l e tt e r, th e D e partment max stat e
that th e unit of gov e rnm e nt or th e pot e ntial e mplox e r
max b e g i n to mak e commitments and e xp e nditur e s on
tlw — proj e ct — xxithoul — cau s ing th e — D e partm e nt to
pr e judic e its consideration of project approval and
proj e ct funding b e caus e of such e xp e nditures. This
le tt e r i s n o t t o be constru e d as proj e ct approxa l . an
indicat i on of approval or anx priorirx in th e al l ocation
of funds. Th« — le tt e r \\\\\ — conx e x — the critical
und e r s tanding that anx monex so sp e nt is sp e nt at th e
r i sk of the unit or the b en eficiarx e mplox e r. and that
th e D e partm e nt acc e pts no r e al, moral or impli e d
liability — for such sp e nding funds, or for loss e s
s ustain e d because funds w e r e so exp e nd e d.
f44(3) All applications for CDBG funds, irr es p e ct ive o f the
F e d e ral thr e shold of tx\o hundr e d thousand dollars
(S200.000 ) . funds will include a disclosure report.
Such report, in addition to requesting identit\ing
information and the amount of funds requested, will
disclose whether or not. and the extent, to xvhich
interested parties have a financial interest in the
application. Interested parties include developers,
contractors, consultants, indix iduals. entities including
units of government with a financial interest greater
than fift\ thousand dollars (S50.000) or 10 percent of
the assistance requested, whichexer is loxver.
AdditionalK. the report x\ill show anx sources and
uses of funds for the project which are not identified
in the application's sourc e s and us e d source and use of
funds statement.
f^4(4) The unit of goxernment will complete its application
on forms dex eloped bx the Department and made
axailable bx the Commerce Finance Center.
f#^(5) An\ application xvhich has incomplete factual data or
lacks suftlcient detail w+H max be returned to the «ftrt
applicant x\ith specific reasons for the return being
stated in writing. Upon receipt of the requested
information a proc ess ing number will be assigned and
consid e ration the Department's rex iew of the
application xvill be completed.
(6) In the exent that an a pplication js receixed at a time
xxhen current xear fundin g js no longer axailable (all
funds haxe been allocated), the Department will so
adxise the applicant of the fundina status. Mx mutual
agreement betxxeen the applicant and the Department.
the application mav be retained by the Department for
final rexiexx of the application and the proposed
project when CDBG program funds are available. m
Authority G.S. 143B-431: 24C.F.R. 5''0.4S9: 42 L'.S.C.A. 5301.
.0204 DISCRETIONARY PUBLIC HEARING BY
THE DEPARTMENT
(a) The Secretarx max hold a public hearing on the proposed
project.
(b) if a public hearing is held, the applicant shall gixe at least
s e v e n 10 daxs notice prior to the hearing. The notice shall
specifx the date. time, place and subject matter of the hearing
and be published in a the non-legal section of a newspaper of
general circulation in the applicant's counrx.
(c) A transcript of the hearing shall be prepared bx the
Secretarx and. along w ith anx exhibits, made a part of the
application.
Aiilhoritr G.S. I43B-431: 42 U.S.C.A. 5301.
.0205 FORMAL APPLICATION PROCEDURES:
APPROVAL
(a) The Secretarx shall prepare a Letter of Approxal and
Grant Offer setting forth all findings and grant conditions.
(b) Th e S e cr e tarx shall designate the unit of government, the
e mplox e r. or the D e partment to publish notic e of approxal of th e
grant in a n e xxspap e r having g e n e ral circulation in th e proj e ct
ar e a. Th e notic e sha ll sp e cify th e Job s cr e at e d or r e tain e d and a U
contact for emploxm e nt applications.
(b) The chief elected official who signed the original
application w ill be the addressee of the Letter of Approval and
Grant Offer from the Secretarx.
Aiithorit}- G.S. I43B-431: 42 U.S.C.A. 5301.
.0206 FORMAL APPLICATION PROCEDURES:
DENIAL
(a) The Secretarx shall indicate in writing the reasons for
denial of an application.
(b) The Secretarx- shall indicate in writing that the unit of
goxernment is invit e d to max prepare a presentation, either
xxritten or oral xvhich speaks factuallx to the unresolxed issues.
The Secretarx or designee shall be present at the meeting to hear
and discuss the issues xxith the unit of goxernment. It shall be
the responsibilitx of the unit of government to persuade the
Secretarx that all the necessarx findings should be made.
(c) Where the unit of goxernment does accomplish its
responsibilitx to persuade the Secretarx. further procedures shall
be as in Rule .020.^ of this Section.
(d) Where the unit of goxernment does not accomplish its
responsibility to persuade the Secretarx. the Secretarx shall
notif\ the unit of goxernment the decision in xxriting. again
specifx ing the reasons for denial.
Authority- G.S. 1438-431: 24 C.F.R. 5'0.4S9: 42 U.S.C.A. 5301.
666
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
SECTION .0300 - FINDINGS REQUIRED FOR
APPROVAL
.0301 GENERAL
In order to approve a project it is necessar>' for the Secretary
to find that:
(1) the project will have a measurable beneficial and
desirable impact on the community,
(2) that the funding for the project is appropriate under
state and federal rules and guidelines for the
Community Development Block Grant programs.
Aulhorin-CS. I43B-431: 24 C.F.R. 5-0.489: 42 U.S.C.A. 5301.
.0302 CRITERIA FOR MAKING NECESSARY
FINDINGS
The Department shall use certain criteria for making the
approval findings, as follov\s:
(1) it must be determined that the op e rator project
business is capable of op e rating — the — proj e ct
completing jts proposed project activities in a
successful manner. Capable means that there is a
business histor>. a financial condition, or other
outstanding business qualifications which support the
conclusion that the entity op e rating th e project
business is capable of operating It in a successful
manner;
(2) that the project is identifiable and s e parabl e free-
standing, with its own measurable an J significantly
beneficial impact. Identifiable and s e parabl e free-
standing means a project which can literally be
separated out and specificallv' identified and
detemiined as the project being discussed, and as such
will have its ovsn measurable and significantly
beneficial impact: result at the project location:
(3) that the project v\ ill be completed. The provision of
legally binding commitments from the grantee and the
beneficiarv employer or employers will be sufficient
evidence that the project is to be completed;
(4) that there is a substantial benefit to persons of low and
moderate incom e , income, or to n e ighborhoods wh e n
census tracks or surv e vs docum e nt numbers of low
and mod e rat e incom e r e sid e nts. Substantial benefit to
persons of low and moderate income mav be
evidenced by employer commitments to assure that
60°o and no l e ss than 51% of jobs created or saved
will be held bv persons of prior low and moderate
incom es ; familv income status; b e nefits to low and
moderat e incom e n e ighborhoods can b e e vid e nc e d by
unan i mous actions of th e e l e ct e d board of tho se unit s
of governm e nt having juri s diction;
(5) that there is a favorable and — strong ratio or
relationship bet\veen the jobs created and the number
of CDBG dollars invested in the project. Favorable
and strong will mean that a project will create or
retain jobs at a rate equal to a ratio of on e or mor e
jobs p e r fiv e thousand dollar s (S5.000) of CDBG
mon e v. or. at a rat e equal to a ratio of on e or more
jobs p e r fifteen thou'-and dol l ar s ($15,000) of CDBG
mon e y when eith e r, the unit of gov e rnm e nt match e s
CDBG mon e y at a rate of one local tax dollar for e ach
throe CDBG dollar s , or. wh e n th e proj e ct is a
manufacturing plant or an — industrial processing
faci li tv'; of CDBG dollars required for the type of
project company involved, and the local government
has committed to meet the local to CDBG match
requirement as required by current program rules and
policies for the project type proposed;
that there is a favorable and — strong — Fatie — er
(6)
relationship between the total dollars invested in the
project, the amount of CDBG money invested, and the
m e asur e d — or r e tain e d — Ad — Valor e m — ta?v — incom e
anticipated taxes or other revenues to either or both
e+ty the municipality and county having taxing
authority and jurisdiction; Favorabl e and strong
m e ans that a proj e ct wil l cr e at e or r e tain r e v e nu e such
as Ad Valor e m tax r e v e nu e or dir e ct sal e s tax e s, or
oth e r gov e rnm e nta l utility op e rating profits such tax es
or r e v e nu e s that w i l l e ith e r:
-fa^ i n th e cas e of an infrastructur e grant, e qual th e
cost of th e infrastructur e grant ov e r a p e riod of
tim e of no l e ss than 12 y e ar s or contribute
significantly to th e propo se d infra s tructur e
costs within a p e riod of fiv e y e ars; . e xc e pt that
in th e cas e of a proj e ct locat e d in a "most
e conomica ll y di s tr e ss e d" county, as defin e d in
G.S. M3B '1 37A(b). this requirement may be
waiv e d by thr S e cretary; or
(¥) i n th e cas e ' 'a loan proj e ct, that will equal th e
maximum l o s s e xp e ct e d in such proj e cts (a sum
e qual to 25% of th e CDBG funds inv e st e d) in
a p e r i od of tim e of no l e ss than 12 y e ars;
{Tj that th e r e is a favorabl e and strong r e lationship
b e tw ee n th e numb e r of jobs sav e d or cr e at e d and th e
un e mploym e nt situation in th e unit or unit s of
gov e rnm e nt impact e d. — Favorab le and strong m e ans
that the labor poo l in the county is at l e ast thr ee tim e s
a s larg e as th e number of jobs creat e d;
(7) in terms of jobs to be created (or retained), the NC
Enterprise Tier or Development Zone designation
level of" the project site will be considered for each
application, along with the latest unemployment
figures and impact on the actual number of
unemployed persons. To the extent feasible, priority
consideration will be given for CDBG assistance for
projects in tlie most distressed areas of the state;
(8) that th e n e c e ssary e xt e nt of required compliance with
federal and state guidelines and legal requirements has
been must be documented. The extent of
documentation required will be that as considered as
reasonable by a prud e nt per s on; and the Director of
the Commerce Finance Center;
(9) if the project is si milar to th e r e tail or service
establishments d e scrib e d in th e 1987 North Carolina
]3:8
NORTH CAROLINA REGISTER
October 15, 1998
667
PROPOSED RULES
Gen e ral Ass e mbly R e solution in S e c. 6. Hous e Bill
2055. th e Secr e tan shall stat e th e ba s i s for th e
approval in th e fac e of thos e conc e rn s e xpre sse d.
involves retail, service or other local market business.
the W>e — S e cretan shall con s id e r application shall
include sur\ e\ s or other market studies as e\ idence
that similar businesses in the 15-25 mile labor work
force area support the project and that the project will
not jeopardize the jobs in their businesses: and
that the application presents evidence for a finding
that the local government applicant, or the project
business jn the case ot'a loan project, has a reasonable
and appropriate gap or need for the CDBG assistance
requested.
Author in- (J.S^ 105-3.4:
U.S.C.A. 5301.
143B-43I: 24 C.F.R. 5'0.4S9: 42
SECTION .0400 - GRANT ADIV1INISTR.4TION
.0401 GRANT AGREEMENT AND FUNDING
APPRONAL
When the Secretarv appro\es the project, an offer of the grant
agreement and funding appro\al and all modifications will
accompany and be attached to the communication of project
appro\al. When the grant agreement is recei\ed bv the unit of
go\emment. it will be signed and returned to the Department ft>F
th e S e cr e tarv 's signatur e . Wh e n sign e d bv all parti e s, it and will
be deemed to be effecti\e.
Auihorin- a..S. I43B-43I: 24 C.F.R. 5^0.489.
.0402 METHOD OF PAYMENT
Recipients will receive pa>ments based on requisitions
submitted for immediate disbursing needs as and approved b\
the Department. Exc e pt for th e closing r e quisition, all such
r e qu e sts shall b e for at l e ast fiv e thousand dollars (S5.000). No
funds will be kept on deposit for more than three banking davs
by the local government grantee. If for anv reason the grant
costs for which funds were requisitioned cannot be paid as
intended w ithin three davs. davs. the local government' fmance
officer shall return the unused funds or contact the Commerce
Finance Center for special instructions.
.AiahoriT}- U.S.
5304ig).
I43B-431: 24 C F.R. 5'0.489: 42 U.S.C.A.
.0404 MONITORING AND GRANT CLOSE OUT
The Commerce Finance Center shall pro\ ide copies of the
fomis and documents needed to fulfill grant requirements in an
annual performance report and in a final grant close out audit.
Location \ isits and conferences w ith benefiting eniplovers shall
be conducted b> the Commerce Finance Center Center, and th e
r e gional — offic e s of th e — busin ess — and — industry — Divi s ion.
Wh e n e v e r possibl e th e \ i s it s s hall b e m ade w i th th e support and
pr e s e nc e of th e l ocal e conomic dev el opm e nt r e pr e s e ntativ e and
both visits shal l b e combin e d i nto on e s es sion wh e n e v e r
po ss ibl e . A minimum of one on-site visit for monitoring
purposes bv Commerce Finance Center staff is required before A
the active grant agreement between the State and the local ~
government grantee can be closed.
AiilhnrirvG.S. 143B-431 : 24 C FR 5~i)4S9.
TITLE 10 - DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Notice is hereby given in accordance with G.S. 1 50B-2L2
thai the DHHS - Division of Medical .Assistance intends to
amend rule cited as 10 \C.4C 26H. 0304.
Proposed Effective Date: April I. 1999
A Public Hearing will be conducted at 1 :30 p.m. on Sovember
5. 1998 at the 1 985 Umstead Dr.. Room 132. Kirby Building.
Raleigh. \C.
Reason for Proposed .4ction: Fhe Division ofFacilit}- SeiTices
has cited many ICF-MR facilities as needing fire sprinkler
systems. In addition, providers recognize the need for
installation of said svs terns .
Comment Procedures: Written comments concerning this ^
rule-making action must be submitted by Sovember 16. 1998 to ^
Portia W. Rochelle. Rule-making Coordinator Division of
Medical .Assistance. 1985 Umstead Drive. Raleigh. AC 2 '603.
Fiscal Note: This Rule does affect the expenditures or revenues
of state and local government funds. This Rule does not have a
substantial economic impact of at least five million dollars
(S5. 000.000) in a 12-month period
SUBCHAPTER 26H - REIMBURSEMENT PLANS
SECTION .0300
ICF-MR PROSPECTFVE RATE
PLAN
.0304 R.\TE SETTING METHOD FOR NON-STATE
FACILITIES
(a) A prospective rate shall be determined annualK tor each
non-state facility to be effective for dates of service for a 12
month rate period beginning each .lulv 1 . The prospectiv e rate
shall be paid to the provider for even. Medicaid eligible dav
during the applicable rate vear. The prospective rate mav be
determined after the etTective date and paid retroactivelv to that
date. The prospective rate mav be changed due to a rate appeal
under Rule .0308 of this Stat e Plan Section or facilitv
reclassification under Paragraph (b) of this Rule. Each non-state
facility, except those facilities where Paragraph (v) of this Rule
applies, shall be classified into one of the following groups:
( 1 ) Group I - Facilities with 32 beds or less.
(2) Group 2- Facilities with more than 32 beds.
668
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
(3) Group 3- Facilities with medically fragile clients. For
rate reimbursement purposes under this Rule
medicalK fragile clients are defined as any individual
with complex medical problems who have chronic
debilitating diseases or conditions of one or more
ph> siological or organ systems which generally make
them dependent upon 24-hour a day
medical/nursing/liealth supervision or intervention.
(4) Facilities in group 1 or 2 in Subparagraph (a)( 1 ) or (2)
of this Rule shall be further classified in accordance
to the level of disability of the facility's clients, as
measured by the Developmental Disabilities Profile
(DDP) assessment instrument which along with the
scoring instrument are hereby incorporated by
reference, including subsequent amendments and
editions. This material is available for inspection and
copies may be obtained from the Division of Medical
Assistance. 1985 Umstead Drive. Raleigh, North
Carolina 27603 at a cost of twenty cents ($.20) per
page. A summarv' of the levels of disability' is shown
in the following chart;
FACILITY DDP SCORE
Level
Low
Hish
1
2
3
4
5
200.00
300.00
125.00
199.99
100.00
124.99
75.00
99.99
50.00
74.99
(b) Facilities shall be reclassified into appropriate groups as
defined in Paragraph (a) of this Rule.
(1) When a facility is reclassified, the rate shall be
adjusted retroactively back to the date of the event
that caused the reclassification. This adjustment shall
give full consideration to any reclassification based on
the change in facts or circumstances during the year.
0\erpa\inents related to this retroactive rate
adjustment shall be repaid to the Medicaid program.
Underpa\'ments related to this retroactive rate
adjustment shall be paid to the provider.
(2) The provider shall be given the opportunit\ to appeal
the merits of the reclassification of any facility, prior
to any decision by the Division of Medical
Assistance.
(3) The provider shall be notified in writing 30 da>s
before the implementation of new rates resulting from
the reclassification of an\' facility.
(4) The providers and the Division of Medical Assistance
shall make every reasonable effort to ensure that each
facility is properK classified for rate setting purposes.
(5) A provider shall tile an\ request for facility
reclassification in writing with the Division of
Medical Assistance no later than 60 days subsequent
to the proposed reclassification effective date.
(6) For facilities certified prior to July 1, 1993. the
facility DDP score calculated for fiscal \ear 1993
shall be used to establish proper classification at July
I. 1995.
(7) For facilities certified after June 30. 1993. the most
recent facilitv DDP score shall be used to establish
proper classification.
(8) A facility reclassification review shall use the most
current facility DDP score.
(9) A facility's DDP score shall be subject to independent
validation by the Division of Medical Assistance.
(10) A new facilitv that has not had a DDP survey
conducted on its clients shall be categorized as a level
2 facility for rate setting purposes, pending
completion of the DDP survey. Upon completion of
the DDP survey, the facility shall be subject to
reclassification and rates shall be adjusted
retroactively back to the date of certification.
Overpayments related to this retroactive adjustment
shall be paid to the Medicaid program.
Underpa\ments related to this retroactive rate
adjustment shall be paid to the provider,
(c) FacilitN rates under this Rule shall be established at July
. 1995. under the following:
( 1 ) For facilities certified prior to July 1 . 1 993. rates shall
be derived from the 1993 cost reports.
(2) For facilities certified during fiscal year 1993-1994,
the fiscal year 1994 facility specific cost report shall
be used to derive rates.
(3) For facilities certified during fiscal year 1994-1995.
the fiscal \ear 1995 facility specific cost report shall
be used to derive rates.
(A) Rates for these facilities shall not be adjusted,
except for the impact of inflation under
Paragraph (k) of this Rule, until the fiscal \ear
1995 cost report has been properly reviewed.
Rates for these facilities shall be adjusted
retroactively back to July I. 1995. once the
fiscal year 1995 facility specific cost report has
been properly reviewed. Overpa> ments related
to this retroactive rate adjustment shall be
repaid to the Medicaid program.
Underpayments related to this retroactive rate
adjustment shall be paid to the provider.
(4) Facilities with rates established during a rate appeal
13:8
NORTH CAROLINA REGISTER
October 15, 1998
669
PROPOSED RULES
proceeding with the Division of Medical Assistance
during fiscal \ears 1994 or 1995 shall not have their
rates established in accordance v\ith Subparagraph
(cK I ). (cK2). or (c)(3) of this Rule.
(A) The rates for these facilities shall remain at the
level approved in the rate appeal proceeding
adjusted only for inflation, as reflected in
Paragraph (k) of this Rule.
(d) For facilities certified after June 30. 1993. rates developed
from tiled cost reports for fiscal \ears subsequent to 1993 may
be retroactivcK adjusted if there is found to exist more than a
two percent difference between the filed per diem cost and either
the desk audited or field audited per diem cost for the same
reporting period. Rates developed from desk audited cost
reports ma\ be retroactiveK adjusted if there is found to exist
more than a two percent difference between the desk audited per
diem cost and the field audited per diem cost for the same
reporting period. The rate adjustment ma> be made after written
notification to the prov ider 30 davs prior to implementation of
the rate adjustment.
(e) Each prospective rate developed in accordance with
Subparagraph (c)( 1 ). (c)(2). or (c)(3) of this Rule consists of the
sum of two components as follows:
( 1 ) Indirect care rate.
(2) Direct care rate.
(f) A uniform industry wide indirect care rate shall be
established for each facility category shov\ n under Subparagraph
(a)( 1 ). (a)(2). or (a)(3) of this Rule.
(1) The indirect rate for group 1 facilities is based on the
fiftieth percentile of the following costs incurred by
all group 1 facilities with six beds or less, except
those related by common ownership or control to
more than 40 said facilities:
(A) The sum of the cost of property ownership and
use, administrative and general, and operation
and maintenance of plant, as determined by the
Myers and Stauffer study performed on the
1 993 base year cost reports.
(2) The indirect rate for group 2 facilities is based on the
fiftieth percentile of the costs noted in Part (0(1 )(A)
of this Rule incurred b\ the group 2 facilities, as
determined by the Myers and Stauffer study
performed on the 1 993 base \ ear cost reports.
(3) The indirect rate for group 3 facilities is based on the
fiftieth percentile of the costs noted in Part (0(1)(A)
of this Rule incurred b> the group 3 facilities, as
determined b\ the Myers and Stauffer study
performed on the 1 993 base year cost reports.
(4) The indirect rates established under Subparagraphs
(f)( 1 ), (f)(2). and (f)(3) of this Rule shall be reduced
as determined based on industry cost analysis by an
amount not to exceed four percent to account for
expected operating efficiencies.
(g) The direct care rate for facilities certified prior to July 1,
1993, shall be based on the M\ers and Stauffer studv performed
on the 1993 base year cost reports.
( I ) rhe direct care rate for all facilities certified during
fiscal years subsequent to fiscal year 1 993 is based on
the first facility specific cost report filed after A
certification. Based on said cost report, the direct care T
rate is equal to the sum of all allowable costs reflected
in the ICF-MR cost report cost centers, as included in
the ICF-MR cost report fonnat effective July 1, 1993,
except for the following indirect cost centers:
(A) Property Ownership and Use.
(B) Operation and Maintenance of Plant and
Housekeeping-Non-Labor,
(C) Administrative and General.
(2) The direct care rate shall be limited to the lesser of the
actual amount incun-ed in the base year or the cost
limit derived from the fiftieth percentile of direct care
costs incuiTed b\ the related facility group in the fiscal
year 1993 base \ear, based on the Mvers and Stauffer
stud).
(3) The fiftieth percentile cost limit shall be reduced b\'
one percent each \ear. for the four year period
beginning July I. 1996, in order to account for
expected operating efficiencies, as detennined based
on industn cost anaK sis.
(4) The fiftieth percentile cost limit shall be increased
each \ear by price level changes calculated in
accordance with Paragraph (k) of this Pule.
(h) The indirect rate shall not be subject to cosi ^ttlement.
( 1 ) Costs above the indirect rate shall not be paid to the
provider. A
(2) Costs savings below the indirect rate shall not be ^
recouped from the provider.
(i) The direct care rate shall be subject to cost settlement,
based on the cost report, subject to audit, filed with the Division
of Medical Assistance.
(1) Costs above the direct rate shall not be paid to the
provider.
(2) Cost savings below the direct rate shall be recouped
from the provider.
(J) Facilities with rates established during a rate appeal
proceeding with the Division of Medical Assistance during fiscal
years 1994 or 1995 may choose to cost settle under the
provisions of Paragraphs (h) and (i) of this Rule, or under the
following procedure:
( 1 ) If during a cost reporting period, total allowable costs
are less than total prospective payments, then a
provider may retain one-half of said difference, up to
an amount of five dollars ($5.00) per patient da\. The
balance of unexpended payments shall be refunded to
the Division of Medical Assistance. Costs in excess
of a facility's total prospective pavment rate are not
reimbursable.
(2) The facilities subject to the Paragraph shall make the
election on cost settlement methodologv on or before
the filing of the annual cost report with the Division
of Medical Assistance.
(3) An election to follow the cost settlement procedures
of Paragraphs (h) and (i) of this Rule shall be
irrevocable.
670
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
#
(4) Rates established for these facilities during future rate
appeal proceedings shall be subject to the cost
settlement procedures of Paragraphs (h) and (i) of this
Rule.
(k) To compute each facilit)'s current prospective rate, the
direct and indirect rates established by Paragraphs (f) and (g) of
this Rule shall be adjusted for price level changes since the base
year. No inflation factor for any provider shall exceed the
maximum amount permitted for that provider b\ federal or state
law and regulations.
(1) Price level adjustment factors are computed using
aggregate costs in the follow ing manners:
(A) Costs shall be separated into three groups;
(i) Labor,
(ii) Non-labor,
(iii) Fixed.
(B) The relative weight of each cost group is
calculated to the second decimal point by
dividing the total costs of each group (labor,
nonlabor. and fixed) b\ the total cost of the
three categories.
(C) Price level adjustment factors for each cost
group shall be established as follows:
(i) Labor The percentage change for labor
.■> costs is based on the projected average
t' ' hourK wage of North Carolina service
workers. Salaries for all personnel shall
be limited to levels of comparable
positions in state owned facilities or
levels specified b\ the Division of
Medical Assistance.
(ii) Nonlabor. The percentage change for
nonlabor costs is based on the projected
annual change in the implicit price
deflator for the Gross National Product
as provided by the North Carolina
Office of State Budget and
Management.
(iii) Fixed. No price level adjustment shall
be made for this categor>.
(D) The weights computed in Part (k)(l)(B) of this
Rule shall be multiplied by the rates computed
in Part (k)( I )(C) of this Rule. These weighted
rates shall be added to obtain the composite
inflation rate to be applied to both the direct
and indirect rates.
(I) Effective July I. 1995. any rate reductions resulting from
this Stat e Plan Rule shall be implemented based on the following
deferral methodolog\':
( 1 ) Rates shall be reduced for the excess of current rates
over base year costs plus inflation.
(2) Rates shall be reduced a maximum of 50 percent of
the fiscal 1996 inflation rate for the excess of actual
costs over applicable cost limits. This reduction shall
result in the facility receiving at a minimum 50
percent of the 1996 inflation rate. An_\ excess
reduction shall be carried fonvard to future Nears.
(3) Total reduction in future \ears related to the excess
reduction carried forward ft-om Subparagraph (1)(2) of
this Rule, shall not exceed the annual rate of inflation.
This reduction shall result in the facilit\' receiving at
a minimum the rate established in Paragraph (l)(2) of
this Rule. Any excess reduction shall be carried
forward to future years, until the established rate
equals that generated by Paragraphs (f). (g)- and (k) of
this Rule.
(4) Rates calculated based on Subparagraphs (1)(2) and
(3) of this Rule shall be cost settled based on the
provisions of Subparagraph (j)(l) of this Rule until
the fiscal year that the facility receives full price level
increase undci Paragraph (k) of this Rule.
(A) A provider may make an irrevocable election to
cost settle under the provisions of Paragraphs
(h) and (i) of this Rule during the deferral
period.
(B) Once the rates calculated based on
Subparagraphs (I )( 2) and (3) of this Rule reach
the fiscal >ear that the facilit>' receives the full
price level increase under Paragraph (k) of this
Rule, then said fiscal year's rates shall be cost
settled based on Paragraphs (h) and (i) of this
Rule.
(C) Chain providers are allowed to file combined
cost reports, for cost settlement purposes, for
facilities that use the same cost settlement
methodolog> and ha c the same uniform rate.
(D) A provider may request from the Division of
Medical Assistance permission to continue cost
settlement under Subparagraph {j)(\) of this
Rule after the deferral period expires. Said
request shall be made each year, 30 days prior
to the cost report due date.
(m) The initial rate for facilities that have been awarded a
Certificate of Need is established at the lower of the fair and
reasonable costs in the provider's budget, as determined by the
Division of Medical Assistance, or the projected costs in the
pro\ ider's Certificate of Need application, adjusted from the
projected opening date in the Certificate of Need application to
the current rate period in which the facility is certified based on
the price level change methodolog\ set forth in Paragraph (k) of
this Rule, or the rate currenti) paid to the owning provider, if the
provider currently has an approved chain rate for facilities in the
related facilir\ categor>. The rate may be rebased to the actual
cost incurred in the first full year of nonnal operations in the
year an audit of the first year of nonnal operation is completed.
( 1 ) In the event of a change in ownership, the new ov\ner
receives no more than the rate of payment assigned to
the previous owner.
(2) Except in cases wherein the provider has failed to file
supporting information as requested by the Division
of Medical Assistance, initial rates shall be granted to
new enrolled facilities no later than 60 days from the
provider's tiling of properK prepared budgets and
supporting information.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
671
PROPOSED RULES
(3) The initial rate for a new taciiit\ shall be applicable to
all dates of service commencing with the date the
facilit) is certified b\ the Medicaid Program.
(4) The initial rate for a new facility shall not be entered
into the Medicaid pa\ment s\stem until the facilit\ is
properly enrolled in the Medicaid program and a
Medicaid identification number has been assigned to
the facilit) b_\ the Division of Medical Assistance.
(n) A pro\ ider vsith more than one facilit\ ma\ be allowed to
recover costs through a combined uniform rate for all facilities.
( 1 ) Combined uniform rates for chain providers shall be
approved upon v\ritten request from the pro\ ider and
after review by the Division of Medical Assistance.
(2) In determining a combined uniform rate for a
particular facility group, the weighted average of each
facility's rate, calculated in accordance to all other
provisions of this Rule, shall be used.
(3) A chain provider with facility(s) that fall under
Paragraphs (h) and (i) of this Rule and v\ ith facilit>(s)
that fall under Subparagraph (l)(4) of this Rule ma\'
elect to include the facilities in a combined cost report
and elect to cost settle under either Paragraphs (h) and
(i) or Subparagraph (l)(4) of this Rule. The cost
settlement election shall be made each \ear. 30 da\s
prior to the cost report due date.
(o) Each out-of-state provider shall be reimbursed at the
lower of the applicable North Carolina rate, as established by
this plart Rule for in-state facilities, or the provider's per diem
rate as established bv the state in which the provider is located.
An out-of-state provider is defined as a provider that is enrolled
in the Medicaid program of another state and provides ICF-MR
ser\ ices to a North Carolina Medicaid client in a facility located
in the state of enrollment. Rates for out-of-state providers are
not subject to cost settlement.
(p) Under no circumstances shall the Medicaid per diem rate
exceed the private pay rate of a facility.
(q) Should the Division of Medical Assistance be unable to
establish a rate for a facility, based on this Rule and the
applicable facts known, the Division of Medical Assistance mav
approve an interim rale.
(1) The interim rate shall not exceed the rate cap
established under this Rule for the applicable facility
group.
(2) The interim rate shall be replaced bv a permanent rate.
effective retroactive to the commencement of the
interim rate. b\ the Division of Medical Assistance,
upon the detemiination of said rate based on this Rule
and the applicable facts.
(3) The provider shall repav to the Division of Medical
Assistance any overpavment resulting from the
interim rate exceeding the subsequent permanent rate.
(r) In addition to the prospective per diem rate developed
under this Rule, effective .luK I. 1992. an interim pavment add
on shall be applied to the total rate to cover the estimated cost
required under Title 29. Part 191 0. Subpart 2. Rule 1 9 1 0. 1 030
of the Code of Federal Regulations. The interim rate shall be
subject to final settlement reconciliation w ith reasonable cost to
meet the requirements of Rule 1 9 1 0. 1 030. The final settlement
reconciliation shall be effectuated during the annual cost report ^
settlement process. An interim rate add on to the prospective '
rate shall be allowed, subject to final settlement reconciliation,
in subsequent rate periods until cost historv is available to
include the cost of meeting the requirements of Rule 1910.1030
in the prospective rate. This interim add on shall be removed,
upon 1 days v\rinen notice to providers, should it be determined
b_\ appropriate authorities that the requirements under Title 29,
Part 191 0. Subpart 2. Rule 1 9 1 0. 1 030 of the Code of Federal
Regulations do not appiv to ICF-MR facilities.
(s) All rates, except those noted otherwise in this Rule,
approved under this Rule are considered to be permanent.
(t) In the event that the rate for a facilitv cannot be developed
so that it shall be effective on the first da> of the rate period, due
to the provider not submitting the required reports by the due
date, the average rate for facilities in the same facilitv group, or
the facilitv 's current rate, whichever is lower, shall be in effect
until such time as the Division of Medical Assistance can
develop a new rate.
(u) When the Division of Medical Assistance develops a new
rate for a facilitv' for which a rate was paid in accordance with
Paragraph (t) of this Rule, the rate developed shall be effective
on the first dav of the second month following the receipt by the
Division of Medical Assistance of the required reports. The
Division of Medical Assistance may, i on its own motion or
upon application and Just cause shown by the provider, within 60
da\ s subsequent to submission of the delinquent report, make the ^
rate retroactive to the beginning of the rate period in question.
Anv overpavment to the provider resulting from this temporary
rate being greater than the final approved prospective rate for the
facility shall be repaid to the Medicaid Program.
(v) ICF-MR facilities meeting the requirements of the North
Carolina Division of Facilitv Services as a facility affiliated with
one or more of the four medical schools in the state and
providing services on a statewide basis to children with various
developmental disabilities v\ho are in need of long-term high
acuitv nursing care, dependent upon high technologv machines
(i.e. ventilators and other supportive breathing apparatus)
monitors, and feeding techniques shall have a prospective
payment rate that approximates cost of care. The payment rate
may be reviewed periodicallv. no more than quarterly, to assure
proper pavment. A cost settlement at the completion of the fiscal
period vear end is required. Pavments in excess of cost are to be
returned to the Di\ision of Medical Assistance.
(w) A special pavment in addition to the prospective rate shall
be made in the vear that anv provider changes from the cash
basis to the accrual basis of accounting for vacation leave costs.
The amount of this pavment shall be determined in accordance
v\ith Title XVlll allowable cost principles and shall equal the
Medicaid share of the vacation accrual that is charged in the year
of the change including the cost of vacation leave earned for that
vear and all previous \ears less vacation leave used or expended
over the same time period and vacation leave accrued prior to the m
date of certification. The pavment shall be made as a lump sum ~
payment that represents the total amount due for the entire fiscal
vear. An interim pavment mav be made based on an estimate of
672
NORTH CAROLINA REGISTER
October 15, 199H
13:8
PROPOSED RULES
the cost of the vacation accrual. The payment shall be adjusted
to actual cost after audit.
(x) The annual prospective rate, effective beginning each .Uily
1. for facilities that commenced operations under the Medicaid
Program subsequent to the base year used to establish rates, and
therefore did not file a cost report for the base year, shall be
based on the facility's initial rate, established in accordance with
Paragraph (m) of this Rule, and the applicable price level
changes, in accordance with Paragraph (I) of this Rule.
(y) Effective for fiscal \'ears beginning on or after fiscal \ ear
1998. installation cost of Fire Sprinkler Systems in an ICF-MR
Facility shall be reimbursed in the following manner.
(1 ) Upon receipt of the documentation listed in Parts (A)
through (E) of" this Subparagraph, the Division of
Medical Assistance shall reimburse directly to the
provider 90 percent of the verified cost.
(A) All related invoices.
Verification from the Division of Facility
Services that the Sprinkler System is needed .
Statement from appropriate authorities that the
Sprinkler System has been installed.
Three bids to install the system.
Prior approval from the Division of Medical
Assistance for any installation projected to cost
more than tyventv-five thousand dollars
($25.000).
(2) The unreimbursed installation cost shall be
reimbursed after audit through the annual Cost
Settlement Process. This portion shall be offset by
profits, after taking into consideration any indirect
profits and direct
determined after
losses.
audit shall
Any overpayments
be returned to the
13]
(4}
program by the provider through the annual cost
settlement process.
The installation of the Sprinkler System ]s subject to
Prudent Buyer Standards contained in the HCFA-15.
The Sprinkler System's installation costs shall be
properly recorded on the provider's ICF-MR Cost
Report.
Authohn' G.S. W8A-25(bl: I08A-54: W8A-55: 42C.F.R. Part
44 ^ Subpart C.
TITLE 11 - DEPARTMENT OF INSURANCE
Notice is hereby given in accordance with G.S. 150B-21.2
that the NC Department of Insurance intends to adopt
rules cited as II NCAC 12 .0840 -.0842. Notice of Rule-making
Proceedings was published in the Register on .August 3, 1998.
Proposed Effective Date: April I. 1999
A Public Hearing will be conducted at 10:00 a.m. on November
5. 1998 at the Dobbs Building, i"' Floor Hearing Room.
Raleigh. NC 2761 1.
Reason for Proposed Action: The Balanced Budget Act of
1997 became effective on July I. 1998. and requires state
agencies to adopt NAIC Medicare Supplement Insurance
Minimum Standards tnodel regulations.
Comment Procedures: Written comments may be sent to
Theresa Shackelford. NC Department of Insurance. PO Box
2638~. Raleigh. NC 2''6II. or call (919) 733-5060.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S3. 000.000) in a 1 2-month period.
CHAPTER 12 - LIFE AND HEALTH DIVISION
SECTION .0800 - MEDICARE SUPPLEMENT
INSURANCE
.0840 HIGH DEDUCTIBLE PLANS
(a) In addition to the benefit plans specified in 1 1 NCAC 12
.0836, the following high deductible benefit plans are authorized
for use in this State. The provisions of 1 1 NCAC 12 .0836(a)
through (d) apply to the plans in this Rule.
(1 ) Standardized Medicare supplement benefit high
deductible Plan F shall include only the following:
100°o of covered expenses following the payment of
the annual high deductible Plan F deductible. The
covered expenses include the core benefit as defined
in ii NCAC 12 .0835(2), plus the Medic :'- ' I^ A
deductible, skilled nursing facilitx care, the viedicare
Part B deductible, 1 OO^'o ot' the Medicare Part B
excess charges, and medically necessary emergency
care in a foreign country as defined in 1 1 NCAC 12
.0835(3 )(a), (b), (c), (e), and (h) respectively. The
annual high deductible Plan F deductible shall consist
of out-of-pocket expenses, other than premiums, for
services covered by the Medicare supplement Plan F
policy, and shall be in addition to any other specific
benefit deductibles. The annual high deductible Plan
F deductible shall be one thousand five hundred
dollars ($1500) for 1998 and 1999, and shall be based
on the calendar year.
(2) Standardized Medicare supplement benefit high
deductible Plan J shall consist of only the following:
1 00°'o of covered expenses following the payment of
the annual high deductible Plan J deductible. The
covered expenses include the core benefit as defined
in 1 1 NCAC 12 .0835(2), p lus the Medicare Part A
deductible, skilled nursing facility care. Medicare Part
B deductible, 1 00° o ot' tfie Medicare Part B excess
charges, extended outpatient prescription drug benefit,
medically necessary emergency care in a foreign
country, preventive medical care benefit and at-home
recovery benefit as defined in H NCAC 12
.0835(3 )( a), (bLttLteiLglthilLLandli}
13:8
NORTH CAROLINA REGISTER
October 15, 1998
673
PROPOSED RILES
respecti\el\. The annual high deductible Plan J
deductible shall consist of out-of-pocket expenses-
other than premiums, for ser\ ices co\ered b\ the
Medicare supplement Plan J polic\. and shall be in
addition to an\ other s pecific benefit deductibles. The
annual deductible shall be one thousand t1\e hundred
dollars (SI 500) for 1998 and 1999. and shall be based
on a calendar \ ear,
(b) After 1999. the annual deductibles for the plans described
in Subparagraphs (a)( 1 ) and (a)(2) ot' thjs Rule shall be those
established annualK by the Secretao. ot' the United States
Department ot' Health and Human Ser\ ices to retlect the change
in the Consumer Price Index for all urban consumers for the 12-
month period ending with August of the preceding \ear. and
rounded to the nearest multiple often dollars (SIO.OO).
Aiahorin- G.S. 58-2-40: 58-54-10: 58-54-15: 58-54-25.
.0841 CREDITABLE CO\ ERAGE
(a) As used m this Rule:
(1) "Continuous period of creditable co\erage" means the
period during which an indi\idual was co\ered by
creditable co\erage. if during the period of the
co\erage the indi\idual had no breaks m co\erage
greater than 63 da\s.
(2) "Creditable co\erage" has the same meaning as in
G.S. 58-68-30(0(1).
(b) If an applicant qualities under 1 1 NCAC 12 .0837(a) and
submits an application during the time period referenced m J_L
NCAC 12 .0837(a) and, as of the date of application, has had a
continuous period of creditable co\erage of at least six months,
the issuer shall not exclude benefits based on a preexisting
condition.
IcJ If the applicant qualifies under 1 1 NCAC 12 .0837(a) and
submits an application during the time period referenced in 1 1
NCAC 12 .0837(a) and, as of the date of application, has had a
continuous period of creditable co\erage that is less than six
months, the issuer shall reduce the period of an\ preexisting
condition exclusion by the aggregate of' tiie period of creditable
co\erage applicable to tiie applicant as ot' tiie enrollment date.
The manner of tiie reduction under this Paragraph shall be a
prescribed by thie Secretar\ of t]ie Cnited States Department of
Health and Human Ser\ices.
tdj 1 1 NCAC 12 .0S37(b) does not appK to this Rule.
Author in- G.S. 58-2-40: 58-54-10: 58-54-15: 58-54-25.
.0842 GL ARANTEED ISSUE FOR ELIGIBLE
PERSONS
(a) .As used in this Rule:
( 1 ) "BankruptcN" means when a Medicare^Choice
organization that is not an issuer has tiled, or has had
tiled against it. a petition for declaration of
bankruptCN and has ceased doing business in the state.
(2) "Employee welfare benefit plan" means a plan, fund
or program of emplo\ee benefits as defined in 29
Li.S.C. ^1002 (Emplo\ee Retirement Income Securit\
Act).
(3) "Insohencv" means when an issuer, licensed to
transact the business of insurance in this State, has
had a final order of liquidation entered against it w ith
a finding of insol\enc\ b\ a court of competent
jurisdiction in the issuer's state of domicile.
(4) ".Medicare^Choice plan" means a plan of co\erage for
health benefits under Medicare Part C as defined in
Section 1859. Title IV. Subtitle A. Chapter 1 of PL.
105-33. and includes:
(A) Coordinated care plans which pro\ide health
care ser\ ices, including but not limited to
health maintenance organization plans (with or
without a point-of-ser\ ice option), plans
offered by pro\ider-sponsored organizations,
and preferred pro\ ider organization plans:
(B) Medicare medical sa\ings account plans
coupled with a contribution into a
Medicare-Choice medical sa\ings account:
and
(C) Medicare-Choice private fee-for-ser\ ice plans.
(b) Eligible persons are those indi\iduals described in
Paragraph (c) of this Rule who appK to enroll under the polic\
not later than 63 da\s after the date of the termination of
enrollment described in Pp'- agraph (c) of tiiis Rule, and who
submit e\ idence of the date i, " termination or disenrollment with
the application for a Medicare supplement polic\.
W ith respect to eligible persons, an issuer shall not den\- or
condition the issuance or effecti\eness of a Medicare
supplement polic\ described in Paragraph (d> of tius Rule that is
offered and is a\ailable for issuance to new enrollees by the
issuer, shall not discriminate in the pricin g of such a Medicare
supplement polic\ because of health status, claims experience,
receipt of health care, or medical condition, and shall not impose
an exclusion of benefits based on a preexisting condition under
such a Medicare supplement polic\.
(c) .An eligible person is an individual described in an\ of the
following Subparagraphs:
( 1 ) The indis idual is enrolled under an emplo\ ee welfare
benefit plan that pro\ides health benefits that
supplement the benefits under Medicare: and the plan
t2J
I
terminates, or tiie plan ceases to pro\ide all such
supplemental health benefits to the indix idual:
The indi\ idual is enrolled with a .Medicare-Choice
organization under a Medicare-Choice plan under
part C of Medicare, and there are circumstances
permitting discontinuance of die indi\ idual's election
of the plan under the first sentence of Section
1851(e)(4) of the federal Social Security Act, which
consists of the following:
"Effecti\e as of Januarx J^ 2002. an indi\idual max
discontinue an election ot' a Medicare-Choice plan
oftered b\ a Medicare-Choice organization other than
during an annual, coordinated election period (under
Medicare) and make a nexx election under this section
ifi
(.A) The organization's or plan's certification (under
i
674
SORTH CAROLIXA REGISTER
October 15. 1998
13:8
PROPOSED RULES
this part) has been
orranization has
terminated or the
terminated or otherwise
discontinued providing the plan in the area m
which the individual resides:
(B) The individual is no longer ehgibie to elect the
plan because of a change in the individual's
" place of residence or other change jn
circumstances specified by the Secretary of the
United States Department of Health and
Human Services, but not including termination
of" the individual's enrollment on the basis
described in Section 1851(g)(3)(B) of the
federal Social Security Act ( where the
individual has not paid premiums on a timely
basis or has engaged in disruptive behavior as
s pecified in standards under Section 1856). or
the plan is terminated for all individuals \\ ithin
a residence area;
(C) The individual demonstrates, in accordance
with guidelines established b\ the Secretary of
the United States Department of Health and
Human Services, that:
(i) The organization offering the plan
substantially violated a material
provision of the organization's contract
under this Part in relation to the
individual, including the failure to
provide an enrol lee on a timeh basis
medically necessan, care for which
benefits are available under the plan or
the failure to provide such covered care
in accordance with applicable quality
standards: or
(ii) The organization, or agent or other
entity acting on the organization's
behalf, materially misrepresented the
plan's provisions in marketing the plan
to the individual: or
(D) The individual meets such other exceptional
conditions as the Secretary of the United States
Department ot" Health and Human Services
may provide."
(3) The individual is enrolled with:
(A) An eligible organization under a contract under
Section 1876 (Medicare risk or cost): or
(B) A similar organization operating under
demonstration project authority, effective for
periods before April I. 1Q9Q: or
(C) An organization under an agreement under
Section I833(a)( I )(A) (health care prepayment
plan): or
(D) An organization under a Medicare Select
policy: and
(E) The enrollment ceases under the same
circumstances that would permit
discontinuance of an individual's election of
coverage under the first sentence of Section
185l(e)(4)ofthe federal Social Security Act as
delineated in Subparagraph (2) of this
Paragraph.
(4) The individual is enrolled under a Medicare
supplement policy and the enrollment ceases because:
(A) Of the insolvency of the issuer or bankruptcy
of the nonissuer organization or of other
involuntary termination of coverage or
enrollment under the policy:
(B) The issuer of the policy substantially violated
a material provision of the policy; or
(C) The issuer, or an agent or other entity acting on
the issuer's behalf, materially misrepresented
the policy's provisions in marketing the policy
to the individual:
(5) The individual was enrolled under a Medicare
supplement policy and terminates enrollment and
subsequently enrolls, for the first time, with any
Medicare+Choice organization under a
Medicare+Choice plan under part C of Medicare, any
eligible organization under a contract under Section
1 876 (Medicare risk or cost), any similar organization
operating under demonstration project authority, an
organization under an agreement under Section
1833(a)( I )(A) (health care prepayment plan), or a
Medicare Select policy; and the subsequent
enrollment js terminated by the enrollee during any
period ys ithin the first 12 months after the subsequent
enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section
1851(e) of the federal Social Security Act): or
(6) The individual, upon first becoming eligible for
benefits under part A of Medicare at age 6x, enrolls in
a Medicare+Choice plan under part C of Medicare,
and disenrolls from the plan by not later than 12
months after the effective date of enrollment.
(d) The Medicare supplement policy to which eligible persons
are entitled under:
LU Subparagraphs (cKl), (2), (3) and (4) of this Rule is
a Medicare supplement policy yvhich has a benefit
package classified as Plan A^ B^ C, or F offered by
any issuer.
(2) Subparagraph (c)(5) is the same Medicare supplement
policy in \yhich the individual y\'as most recently
previously enrolled, if available from the same issuer,
or, if not so available, a policy described in
Subparagraph ( I ) of this Paragraph.
(3) Subparagraph (c)(6) shall include any Medicare
supplement policy offered by any issuer.
(e) At the time of an event described in Paragraph (c) of this
Rule because of yvhich an individual loses coverage or benefits
due to the termination of a contract or agreement, policy, or plan,
the organization that tenninates the contract or agreement, the
issuer terminating the policy, or the administrator of the plan
being terminated, respectively, shall notifi' the individual of his
or her rights under this Section, and of the obligations of issuers
of Medicare supplement policies under Paragraph (b) of this
13:8
NORTH CAROLINA REGISTER
October 15, 1998
675
PROPOSED RULES
Rule. Such notice shall be communicated contemporaneousl\
with the notitlcation ot' tennination. At the time ot' an event
described jn Paragraph (c) of thjs Rule because of which an
individual ceases enrollment under a contract or aareement.
policN, or plan, the ortzanization that offers the contract or
agreement, regardless of the basis for the cessation of
enrollment, the issuer offering the policy, or the administrator of
the plan. respectiveK. shall notify the indixidual ot" hjs or her
rights under this Section, and of the obligations of issuers ot"
Medicare supplement policies under Paragraph (b) of this Rule.
Such notice shall be communicated within 10 working days of
the issuer receiving notification of disenrollment.
AiilhorllvG.S. xS-:-l<): 5S-54-in: 5S-54-I5: 5,S-5-t-25.
TITLE 13 - DEPARTMENT OF LABOR
Notice is hcrehy iriren in accordance wilh (J.S. 1 51)8-21.2
thai the Department of Labor intends to amend rules cited
as 13 SCAC 12 .0303 - .030^. .0602. .0604. .0-01 - .0-02:
adopt rules cited as 13 XCAC 12 .0308 - .0310. .0803 - .080^:
and repeal rules cited as 13 NCAC 12 .0101. .0104. .0502.
. 0603. . 0605. Notice of Rule-making Proceedings was published
in the Register on August 3. 1998.
Proposed Effective Date: April I. 1999
A Public Hear'mo will be conducted at 10:00 a.m. on November
3. 199S at the Administrative Office of the Courts Classroom.
322 Chapanoke Road Raleigh. NC 2-603.
Reason for Proposed Action: To update the Wage and Hour
rules to accord with statutory amendments and to reflect current
policy and interpretations.
Comment Procedures: Written comments will he accepted
through 5:00 p.m. on November 16. 1998. Written comments
must be delivered or mailed to Ann B. Wall. NC Department of
Labor 4 West Edenton Street. Raleigh. NC 2-601.
Fiscal Note: These Rules do not affect the expenditures or
revenues of stale or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S 5. 000. 000) in a 12 -month period.
CHAPTER 12 - WAGE AND HOUR
SECTION .0100 - GENERAL PROVISIONS
.0101 W.AGE AND HOUR DIVISION
Th e ma i n oftlc e of th e Wag e and Hour Dixision. which
administ e r s th e provision s of Articl e -A of G.S. Chapt e r Q5. i s
maintain e d i n th e Ral e igh oftlc e of th e D e partm e nt of Labor at
I West Ed e nton Str ee t. Ral e igh. North Carol i na 27601. Th e
Divis i on maintains branch offic e s at 20 South Spruc e Str ee t.
Ash e v i ll e . North Carolina; 1 15 Broadfoot Av e nu e . Fay e tt e vili e .
North Carolina; and 500 W es t Trad e Str ee t. Charlotte. North
Caro l ina. Th e mai l ing addr e ss is:
Wag e and Hour Division
North Carolina D e partm e nt of Labor
■I W es t Ed e nton Str ee t
Ral e igh. North Carolina 27601
91Q/7'"33 2152.
Authority G.S. 95-25. H.
.0104 FORMS
(a) An Inv e stigat i on Report will b e u se d to cite employ e rs for
violations of th e Wag e and H o u r Act. A r e port will includ e s uch
infonnat i on a s em ploy e r id e ntification, dat e of writing, a listing
of violation s by r e f e r e nc e to th e g e n e ral statut e s, a d e scription of
e ach \iolation. th e iny e stigating compl i anc e officer's s ignatur e
and. if poss i bl e , the s ignatu re o f th e e mploy e r.
(b) Wage Transcript i on and Computation Sh ee ts will b e us e d
to comput e back wag e s du e und e r the Wag e and Hour Act. A
s e parat e sh ee t may b e us e d for e ach e m pl o yee . Each sh ee t yvi l l
includ e — stjeii — information — as — e mp l oy er — aed — e mploy ee
id e ntification, dat e of yvriting. dat e s and hours of e mploym e nt
for which back wag e s ar e b e ing computed, rates of pay for th e
p e riod of e mploym e nt, yvag es a ctu all y pa i d, th e amount du e th e
em p l oy ee . — aftd- the — inv e stigating — complianc e — offic e r's
id e ntificat i on.
(c) A Summary of Lmpaid Wag e s yvill be u s e d to summariz e
for e mp l oy e r s th e unpaid back wag e s and th e amounts oy\ e d a l l
e mploy ee s. A summary \\\\\ — includ e such information as
e mploy e r id e ntification, dat e o f yvriting. id e ntification of th e
inv e st i gating complianc e offic e r and th e total amount of unpaid
yvag e s du e by th e e mploy e r. A summary ysill list e ach e mploy ee
by name, th e tim e period fo r which wag e claims for e ach
e mploy ee ar e b e ing comput e d and th e gross amount du e e ach
e mploy ee . If th e e mploy e r agr ee s to pay th e back wag e s or som e
port i on of th e m, the e xp e cted dat e of paym e nt yvill b e includ e d
on th e summary.
(d) A Back Wag e R e c e ipt may b e us e d to v e rify paym e nts of
y \ ag e s to e mploy ee s by e mploy e rs. .\ r e c e ipt w ill includ e such
information as employer and e mploy ee id e ntification, th e
e mploym e nt p e riod for which th e back wag es ar e b e ing paid, th e
amount of yvag es r e ceiv e d by th e e mploy ee (d e tailing any
d e ductions or y\ithholdings). and a r e l e as e o r waiver by th e
e mp l oy ee of th e right to bring a civi l action pursuant to th e Wag e
and Hour Act to r e cov e r back y\ag e s. A r e c e ipt will also includ e
th e signatur e s of th e e mploy ee and th e e mploy e r and th e dat e of
signing.
fe4 — A Youth Employm e nt C e rtificat e y\ill be used for
app l ication and issuanc e of e mploym e nt c e rtificat e s for work e rs
under — 18 y e ars of ag e . — A — c e rtificat e yvill — includ e such
informat i on a s youth identification, inc l udi n g ag e . and e mploy e r
id e ntific a t i o n , in cluding a job d e scr ip t i o n of the yvork to b e
p e rfonn e d by th e youth and th e hour s to b e work e d. A c e rtificat e
will also includ e th e signatur e s of a par e nt or g u ardian, th e
e mploy e r, and th e youth. An appro\ e d c e nificat e will include th e
si gnatur e of th e Dir e ctor of Social S e rvic e s.
i
<
676
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
(0 An Application for a Handicapp e d Work e r's P e rmit w i ll
be used for r e qu e sting subminimum wag e rat e s fc handicapp e d
(b) An employer must maintain accurat e and compl e te records
of e ach e mploy ee 's tips, wh e th e r rec e iv e d individually or as part
work e rs. An application wil l includ e e mp l oy e r and e mpkn ee of a tip pooling arrang e m e nt. — individual contributions and
id e ntification. An application will a l so includ e such informat i on r e sulting shar e s of any tip pooling mu s t b e r e cord e d. — Ifi
as a job classification and a description of th e duti e s r e quir e d in addition, an e mploy e r's r e cord s must show th e amount claim e d
the classification, the wag e rat e (as a p e rc e ntag e of th e minimum as a tip credit for each employ e e for e ach workw ee k. — If th e
wag e ) \shich the e mplo\ e r propo se s to pa> th e wo r k e r, th e w age amount c l aim e d as a cr e dit cannot be calculated from th e r e cords
rat es of nonhandicapp e d work e rs in th e s am e Job c l assification,
and th e total numb e r of handicapped and oth e r work e rs
employ e d. An application will also contain a d e scription of th e
natur e of th e worker's disabilit> and th e d e gr ee of handicap in
r e lation to the duties r e quir e d b\ th e job classification. An
application v\ill inc l ud e the signatur e s of th e e mployer and th e e mploy ee 's tip s , obta i ning th e signatur e or initials of th e
for any workw ee k, th e employ e r ma\ not count th e tip s a s
wag es . A tig shall not include a service charge which the
employer requires the customer to pa\. no matter what the
charge js labeled.
(c) If an e mp l oy e r maintains th e requir e d records of e ach
handicapped work e r and th e date of signing.
e mploy ee s — monthly — er — for — eaeh — pa^i — p e riod — const i tut e s
(g) Wh e n a m e dical e .xamination is r e quir e d pursuant to Rul e c e rtification h\ th e employe e s and th e s e tips will b e count e d as
.0202 of this Chapt e r, th e e xamining ph\sician ma> compl e t e a wages pursuant to G.S. 05 25.3(f). Tips belong to the emplo\ee
Doctor's Certificat e of Work e r's Hand i cap to indicate any for whom the\ were left by the customer. Emplo\ees and
phssical or m e ntal disab ili ti e s th e handicapp e d work e r has. Thi s employers mav not agree that the employee will surrender tips to
c e rtificat e will includ e such infonnation as e mplo\ee and
emploN e r id e ntification. Job class i fication and d e scription, and
c e rtification b\ th e physician that th e ph\ sical or m e ntal d e f e ct
constitut e s a disability for th e particular Job which th e work e r
will b e p e rforming. Th e c e rtificat e will al s o inc l ud e th e dat e d
signatur e of th e examing phxsician.
{h) — A Handicapp e d Work e r C e rtificat e will b e us e d to
authoriz e subminimum wag e rat e s for disabl e d or handle, .pp e d
work e rs. A c e rtificat e will includ e e mploy e r and e mploy ee
id e ntification and th e Job classification. A c e rtificat e will also
includ e th e submimimum wag e rat e which may b e paid to th e
handicapp e d work e r and th e e ff e ctiv e dat e of th e c e rliflcat e . A
c e rtificat e will b e dat e d and sign e d by th e Dir e ct^ i r of th e Wag e
and Hour Divi s ion.
(i) An Emplo\m e nt Information Form will be used to r e duc e
v\ag e and hour compla i nts r e ceiv e d by the Wag e and Hour
Division to writt e n form. A complaint form will includ e s uch
information as e mplo\er and employee identification, filing dat e
of complaint, p e riod of employm e nt. Job classification and
d e scription, m e thod of paym e nt of wag e s, and work sch e du le .
Th e al le ged wag e and hour violation wi l l b e id e ntifi e d on th e
complaint. Any complaints r e duc e d to writing b\ th e Wag e and
Hour Division wil l also includ e th e id e ntification of the intak e
p e rson.
tj^ — F e deral wag e and hour forms us e d to c e rtify sh e lt e r e d
workshops for th e handicapp e d pursuant to th e F.L.S.A. ma\ b e
us e d b> th e Wag e and Hour Division for c e rtification und e r th e
Wag e and Hour Act.
Authority G.S. 95-25.3: 95-25.5: 95-25.1": 95-25.19: 95-25.22.
SECTION .0300 - WAGES
.0303 TIPS AND TIP CREDITS
(a) For th e purpose of counting tip s a s wag e s pursuant to G.S.
95 25.3(f). acc e ptanc e of wag e s from th e e mploy e r do e s not
constitute c e rtification b\ the employ ee of tips r e c e iv e d. Tips
are not wages. Tips ma\ be counted toward wages onl\ to the
extent set for th in Paragraphs (e). (f) and (g) of this Rule.
the employer However, if there js a fig pooling arrangement
under Q5-25.3(f). the employee ma\ be required to surrender tips
received for distribution in accord with the tip pooling
arrangement.
[dj if a customer pays by credit, charge or debit card and
includes a tip for an employee:
( 1 ) the tips so charged accrue to the employee at the time
of the charge. The employer shall pay the employee
the charged tip no later than the payday for the pay
period in yyhich the customer signs the charge: and
(2) employers may retain from the tips an amount up to or
equal to the pro rata portion of the fee charged by the
card issuing company which is attributable to the tips.
When employers make such retentions, they do so
y\ ithout violating G.S. 95-25.6 and yvithout becoming
disqualified from claiming the tip credit on the
charged tip.
(e) In order for an employer to claim a tip credit toward the
minimum wage:
( 1 ) the employee must be a tipped employee ysithin the
meanin g of the Act:
(2) the employer shall notify the employee in advance of
the pay period in which the employer intends to claim
the tip credit: and
(3) the employee must retain all tips, subject to any valid
tip pooling arrangement as described in Paragraph (h)
of this Rule.
(f) The following records shall be kept by the employer for
each employee for yvhom a tip credit is claimed:
( 1) Complete and accurate records of the amount of tips
received for each workyveek. The sole exception to
this requirement js set forth in Paragraph (g) of this
Rule;
(2) Certification by the employee of amount of tips
received. The employee certification js the
employee's signature or initials on the employer's
records. Certification shall occur either monthly or
for each pay period. The sole exception to this
requirement is set forth in Paragraph (g) of this Rule.
B:H
NORTH CAROLINA REGISTER
October 15, 1998
677
PROPOSED RULES
An employee's acceptance of uaaes from the
employer shall not constitute certification by the
employee of tips received:
(3) The amount claimed b\ the employer as tip credit for
each employee for each workweek:
(4) For each employee participating in a tip pool, for each
workweek, the amount of contributions to the tig pool:
and
(5) For each employee participating in a tip pool, for each
y\orky\eek. the amount receiyed from the tjp pool.
(gj If the employee refuses to certify or to certil\ accurately
and completely the amount of tips receiyed. a tip credit may be
claimed if the employer:
( 1 ) meets the requirements of Paragraphs (e)(3) and (f) of
this Rule: and
(2) can demonstrate yvith written documentation for each
workweek for y\hich a credit is claimed:
(A) that the tipped employee certifies having
receiy ed tips in the amount for y\hich the credit
is taken, or
(B) that a similarly situated tipped employee
recejy ed tips in the amount for which the credit
is taken, or
(C) by other method yvhich reliably establishes that
the tipped employee regularly receives tips jn
the amount for yvhich the credit js taken.
(h) "Tip pooling" as used in G.S. 95-25. 3(f) is an arrangement
jn which aU or a part of the tips of the contributing employees
are combined into a common pool and then diy ided among the
participating employees according to a pre-determined formula.
An employee's share of a tig pool js that portion of the total
amount in the pool yvhich the employee receives. A tip pooling
arrangement is valid under G.S. 95-25. 3(f) when:
( 1 ) the contributin g employees are notified of the
arrangement before the pay period in which h will be
used:
(2) the share of each contributing employee is at least
85° of thie employee's tips before the employee
contributes to the tip pool: and
(3) only employees who customarily and regularly receive
tips receive a share from the pool.
The requirement of 95-25.6 that the employer pay "tips accruing
to tfie employee" shall be satisfied if thie employee in a tip
pooling arrangement receives 85°o of tfie employee's actual tips
before pooling or the employee's share received from the pool.
whichever is greater.
By complying with Subparagraph (h)(2) of this Rule, the
employer has also satisfied the provision of G.S. 95-25. 3(f)
requiring the employer to allow the tipped employee to retain all
tips.
AiithorinG.S. 95-25. 3: 95-25.6: 95-25.13: 95-25.15: 95-25.19.
.0304 W ITHHOLDING OF WAGES
(a) An e mp l oy e r may withhold, d e duct or div e rt any portion
of an e mploy ee 's wages if t he e mploy e r has obtain e d a writt e n
authorization from th e employee in accordanc e with G.S.
95 25.8. and th e d e ductions comply with th e following monetary
l i mitations:
f+^ Th e combin e d amount of any authoriz e d payroll
d e ductions for cash s hortag e s, inv e ntor)' shortages,
loss or damag e to an e mploy e r's prop e rty' and d e posits
mad e by th e e mploy ee for th e us e of th e e mployer's
prop e rty may not r e duc e an e mploy e e's pay chock for
any pa > period b e low th e amount sp e cified in G.S.
95 25.10.
f3^ Any r e coupm e nt or payment rec e ived by an e mploy e r
from an e mploy ee for shortag e s, losses, damag e s and
d e posits b_v m e thods oth e r than payroll d e ductions
( s uch — as — eash — paym e nts — or e ndorsing — over of
paych e ck s ) is al so limite d so tha t th e combin e d
amount of any such r e co u pm e nt may not r e duc e an
e mploy ee 's wag e s for any pay p e riod b e low th e
amount s pecifi e d in G.S. 95 25.10.
fb^ Pay roll deductions — for cash — shortages. — inv e ntory-
shortag e s, or lo s s or damage to an e mploy e r's property arc
furth e r limit e d in that e v e n wh e n prop e rly authoriz e d, th e y may
not b e d e duct e d from an e mploy ee 's wages un le ss th e employe e
r e c e iv e s notic e of the amount to b e d e ducted s e v e n day s prior to
«
the-
day on which th e d e duction is to b e mad e . This s e v e n
pay
day advanc e notic e do e s not apply to such d e ductions in a fmal
payc' ^e ck. although i f a blank e t authorization is in e ff e ct some
advar . '' notice and a r e asonabl e opportunity to withdraw must
b e giv e n in accordanc e with G.S. 05 25.8.
(e) i_aj The employer m«st shall furnish the employee an
itemized statement indicating the amount and purpose of all
deductions, diversions, payments or withholding of wages for
each pay period in which deductions or recoupments are made.
f4) £b) A repayment in excess of the statutory limitation
prescribed in Paragraph (a) of this Rul e and G.S. 95-25.10, is
permitted if the repayment is voluntary. A repayment is
voluntary if it is made without fraud, misrepresentation, er
undue influ e nc e , influence, duress, or coercion.
fe) |_cj In the case of employees for whom there is no hourly
record-keeping requirement, an average number of hours worked
per pay period may be agreed upon in writing in adv ance by the
employer and each employee and may be used for calculating the
amount of protected w ages each pay period. Such agreements
are subject to modification as necessary to reflect permanent and
substantial changes in the average number of hours worked per
pay period.
.AiilhovinG.S. 95-25.8: 95-25.9: 95-25.10: 95-25.11: 95-25.13:
95-25. 1 9.
.0305 ALTHORIZ.ATION FOR WITHHOLDING OF
WAGES
(a) An authorization by an e mploy ee which will allow th e
e mploy e r to w ithhold or div e rt a portion of th e employ ee's w ag e s
must b e in writing and must sp e cily th e r e ason for th e d e duction.
employer may withhold or divert a portion of an employee's
wage s without the employee's authorization only when the
employer is required or empowered to do so by North Carolina
or federal law. A valid authorization by an employee is required
678
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
in all other circumstances for an employer to make a deduction
from an employee's wages. Two types of authorization are
permitted:
( 1) A specific authorization shall be used when the
amount or rate of' the proposed deduction js known
and agreed to at the time the emplo\ee signs the
authorization.
(2) A blanket authorization shall be used when the
amount of the proposed deduction js not known and
agreed to at the time the empioNce signs the
authorization.
(b) An authorization for withholding of wag e s must be sign e d
on or b e for e th e payday for th e pay p e riod from which the
d e duction is to be made. — The two permi s sibl e typ e s of
authorization ar e th e sp e c i fic authorization and th e blanket
authorization, by an employee, to be yalid, shall:
ill
(2}
(3J
£5J
be written;
be signed by the employee on or before the payda\ for
the pa\ period for which the deduction is being made;
shovN the date of signing by the em plo\ee;
state the reason for the deduction; and
if it is a specific authorization, state the specific dollar
amount or percentage of wages to be deducted from
each pa\ check and tfie number of pa\ checks or length
of time for which the deduction is authorized.
(c) A specific authorization may be for one or more
paychecks and mtjst shall state the dollar amount or percentage
of wages which the employee agrees may be deducted from each
paycheck. Emp l oy ee s EmpI vers shall giye employees must b e
giv e n a reasonable opportunity to withdraw specific
authorizations if such deductions are for their convenience.
Deductions for the convenience of the employees include, but
are not limited to. such things as insuranc e , savings plans, credit
union installments, savings bonds, union or club dues, unifonn
rental, uniform cleaning, parking and charitable contributions.
All other authorizations for w i thholding of s p e c i tlc amounts,
onc e agr ee d upon by an e mploy ee , may not b e withdrawn.
(d) A blank e t authorization may b e s ign e d b> an e mploy ee
which — authoriz e s — sp e citlc — categori e s — ef — d e duction s — er
withholdings without sp e cifying an actual dollar amount. Wh e n
th e amount of any such d e duction b e comes known, th e e mp l oy e r
may not mak e th e d e duction until th e e mploy ee has b ee n giv e n
advanc e notic e of th e sp e cific amount of th e propos e d d e duct i on
and has b ee n giv e n a r e asonable opportunity to withdraw h is
authorization b e for e th e deduction is mad e . What constitut e s
advance notice — for d e ductions — involving cash — shortag es ,
inventory s hortag e s, or loss or damage to an e mploy e r's property
is at l e a s t th e s e v e n day p e riod proscrib e d by G.S. 25.9 and Rule
.030 1 of thi s S e ction. An employer shall not make a deduction
under a blanket authorization until the emplo\ee has been given:
( 1 ) Advance notice of the specific amount of the
proposed deduction. For purposes of deductions
involving cash shortages, inventory shortages, or loss
or damage to an employer's property, advance notice
shall be at least the seven day period prescribed in
G.S. 95-25.9.
(2) A "reasonable opportunity to withdraw" the
authorization before the deduction is made. A
reasonable opportunity to withdraw a blanket
authorization shall be at least three calendar days from
the date of die employer's notice of tlie specific
amount of the deduction to be taken.
(e) Sp e cific and blank e t authorizations signed by an e mploy ee
may not waiv e and mu s t comply with th e au t h orizat i on
r e quir e m e nts. When an authorization is required by the Act, the
monetary limitations and time requirements specified in G.S.
95-25.8. 95-25.9 and 95-25.10 of the Wage and Hour Act. and
th e ru le s and r e gulations promulgat e d th e r e und e r. Act apply and
shall not be waived.
(f) Advances of wages to the employee at the employee's
request are considered to be prepayment of wages. Advances of
wages to a third party at thie employee's request are also
considered to be prepayment of wages. A dated receipt, signed
bv the emplo\ee. for the advanced wages, shall be sufficient to
show that the advance was requested and made. No w ithholding
authorizations are required by G.S. 95-25.8(2) when the
employer deducts for the advanced wages.
(g) In the absence of an executed loan document, the principal
of a loan from an employer to an employee is considered to be
an advance of wages. Such loans may include credit advanced
by tlie employer to an employee at the employee's request for
purchasing from the employer items not primarily for the benefit
of tlie employer. Deductions for interest and other related
charges require written authorizations in accordance with these
Rules. Personal loans from a superyisor to a subordinate or
loans made by third parties to an employee with payroll
deduction arrangements are not an advance of wages.
(h) An Dverpayment of wages to an employee as a result of a
miscalcu'ation of wages or other bona fide error may be treated
as an advance of wages by tfie employer. An underpayment of
wages to an emplo\ee as a result of a miscalculation of wages or
other bona fide error shall be a violation ot" G.S. 95-25.6. The
employer shall pay any such underpayment owed as soon as
possible upon the discovery of the error along with accrued
interest at the legal rate set forth in G.S. 24-1 from the date the
wages first became due.
(iJ Authorizations for deductions that are not pennitted by law
are invalid. For example:
( 1 ) G.S. 97-21 invalidates agreements by an emplo\ee to
gay any portion of a premium paid by his or her
employer to a workers' compensation insurance
carrier;
(2) 13 NCAC 7F .010l(aK2) requires the employer to
provide, at no cost to tfie emplo^ee. ali personal
protective equipment which the employee does not
wear off the jobsite for use off the job.
If an employer withholds or diveils wages for purposes not
pennitted by law, the emplo\er shall be in violation of G.S. 95-
25.6 or G.S. 95-25.7. or both, even if tlie employee authorizes
the withholding in writing pursuant to G.S. 95-25.8(2). because
that authorization is invalid.
(jj An employer may obtain a written authorization pursuant
to G.S. 95-25.8(2 )(a) and include in the authorization a provision
for deducting the balance of the unpaid amount from the
13:8
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679
PROPOSED RULES
employee's paycheck in the event the employee separates before
the full amount has been collected. If the emplo\er obtains such
an authorization, the emplo\er may deduct as much of the
balance possible from the final pa\check without having to give
the emplo\ee notice of the amount and a reasonable opportunit\
to w ithdrau his or her authorization as required by G.S. 95-
25.8(2)(b). subject to the withholding limitations of G.S. 95-
25.10. ff the emploxer does not include in the specific
authorization an express pro\ ision to deduct the balance upon an
emplo\ee's separation, then an emplo\er shall not deduct from
the t1nal pa\check an unpaid balance which is greater than the
specific amount or percentage authorized unless an additional
authorization is obtained.
(k) A wage credit in the form of tips in accordance w ith Rule
.0303 of this Section, or the reasonable costs of meals, lodging
or other facilities m accordance Rule .0301 of this Section, is not
a withholding of wages and does not require written
authorization pursuant to G.S. 95-25.8(2).
[JJ An emploNer js permitted to establish an escrow or bond
account funded tn an emploxee's wages to recoxer amounts
owed to the emplo\er. as long as the emplo\er obtains a \alid
authorization from the emploxee pursuant to G.S. 95-25.8(2)
before di\erting wages to such an account. An emplo\ er must
also obtain a valid authorization from the emplo\ee before
making a deduction from the account. Upon discontinuance r f
emplo\ment for an\ reason, remaining funds shall be returned t.
the emplo\ee.
AmhonnG.S. 95-25. S: 95-25.9: 95-25.10: 95-25.11: 95-25.13:
95-25.19.
.0306 VACATION PAY
(a) The purposes of the \acation pro\isions of the Wage and
Hour Act are to ensure that emplo\ ees know what their \ acation
benefits are and that the\ receive the promised benefits.
Employ e es must Employers shall b e notifi e d notifs employees
of company the emplo\er's policies and practices concerning
vacation pa\ in two \va\s. as follows:
( 1) Pursuant to G.S. 95 25.I3( 1 ). an e mploy ee must b e
notified oralK OralK or in writing at the time of
hiring. Pursuant to G.S. 95 25.13(2). an emplo\o e s
must also b e notified
(2) B\ makin g a cop\ of the policies and practices
available to them in writing or through a posted notice
maintained in a place accessible to the e mplo\ ee .
employees.
(3) Before the effective date of an\ changes, in writing or
through a posted notice maintained jn a place
accessible to the employees.
(b) All vacation policies and practices communicat e d to
e mployees — Ffttjst shall address: th e m e thod — of vacation
calculation
( 1 ) how and when vacation is earned so that the e mploy ee
know s employees know the numb e r of da\ s amount of
\ acation to which he-is the\ are entitled;
(2) whether or not vacation days time ma\ be carried
forward from one \ear to anothe r: another. and if so.
{
in what amount;
(3) when vacation days time must be taken;
(4) when and if vacation pa\' ma\ be paid in lieu of time
off; and
(5) under what conditions and in what amount vacation
pa\ will be paid upon t e rm i nation, discontinuation of
employment.
(c) Ambiguous policies and practices w+H shall be construed
against the employer and in favor of the employees.
fM — If a company provides vacations, all vacation tim e or
paym e nt in li e u of tim e off must b e pa i d to th e e mployees in
accordanc e with e stablish e d company policy or past practice as
known and und e r s tood bv' th e e mploy ee s.
^ [d] Any employer who fails to notify an employee in
accordance with G.S. 95-25.13 and Paragraph (a) of this Rule,
of any policy or practice which requires or results in a loss or
forfeiture of vacation time or pav. is liable for such vacation time
and pav without loss or forfeiture bv the employee.
.-tnthoriivG.S. 95-25.2: 95-25.12: 95-25.13: 95-25.19.
.0307 BONUSES AND COMMISSIONS
(a) Paym e nt of Employ ers may pav vsages based on bonuses,
commissions or other forms of calculation mav b e paid as
infrequently as annually, so long a s if the employees are so
notified in advanc e of th e e mploy e r's tim e for paym e nt of such
wag e s, before earning such wages. Employees must also b e
notifi e d Employers shall notify employees in accordance with m
the provisions of G.S. 95-25.13 of any company policy or "
practice which requires or results in forfeiture of such wages.
(b) Employees must be notifi e d of th e tim e for paym e nt and
of forf e itur e polici e s r e lating to wag e s bas e d on bonus e s,
commissions or oth e r forms of ca l culation in tvvo ways.
Pursuant to G.S. 95 25.13(1). an e mp l oy ee must b e notifi e d
orally or in writing at th e tim e of hiring. — Pursuant to G.S.
95 25.13(2). an e mploy ee must also be notifi e d in writing or
through a post e d notic e maintain e d in a plac e acc es s i bl e to the
e mploy ee . Employers shall notify einplovees of the employer's
policies and practices concerning pav. wages based on bonuses,
commissions, or other forms of calculation as follows and in
accordance with Rule .0801 of this Chapter:
( 1 ) Orally or in writing at the time of hiring;
(2) By making a copy of the policies and practices
available to them in v\riting or through a posted notice
maintained in a place accessible to the employees; and
(3) Before the effective date of anv changes, in writing or
through a posted notice maintained m a place
accessible to the employees.
(c) Any employer who fails to notify an employee in
accordance with G.S. 95-25.13. and Paragraphs (a) and (b) of
this Rule, is liable for such wages based on bonuses, commission
or other forms of calculation without forfeiture bv the employee.
.Authority G.S. 95-25.6: 95-25. ~: 95-25.13: 95-25.19.
.0308 FINAL PAY FOR SEPAR.ATED EMPLOYEES
(a) For purposes of G.S. 95-25.7 and these Rules:
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PROPOSED RULES
( 1) "Separated employees" are employees whose
employment has been discontinued either yoluntarily
or invoiuntarJK for any reason.
(2) "The next regular payday" is the payday for the pay
period in which the separated employee's employment
is discontinued, except for bonuses, commissions and
other forms of compensation. "The next regular
payday" for bonuses, commissions and other forms of
compensation js the first regular payday for the pay
period in which such wages become calculable.
(b) If an emploNce requests that the employee's final pa\ check
be mailed, the employer shall mail the paycheck to the employee
at the employer's expense. Employers shall not withhold the
final paycheck because the employee refuses to come to the
business office or place of employment to pick up the pa\check.
The employer may req uire the employee to provide a notarized
or witnessed written request for the mailing of the final
paycheck.
[cj If a final paycheck mailed at the employee's request:
LU
12)
Js lost or stolen before the employee receives jt^ the
employer shall replace the paycheck upon request of
the employee. The employer shall not deduct costs
related to replacin g the check without written
authorization from the employee in accordance with
Rule .0305 of this Section.
Is lost or stolen after the employee receives it, the
employer shall re place the paycheck upon request of
the employee. The emplox er may deduct costs related
to replacing the paycheck without a ritten
authorization from the employee.
"Costs of replacing the paycheck" shall include the cost of
stopping payment on the lost or stolen check,
(d) An employer owes the employee the wages due until the
employee receives the final paycheck. However, if the check is
dishonored by the financial institution against which it is drawn.
then the employer's obligation to pay the wages remains.
Authority G.S. 95-25.2: 95-25.6: 95-25.
95-25.19.
95-25. 7A: 95-25.8:
.0309 FORM OF PAYMENT OF WAGES
G.S. 95-25.6 and G.S. 95-25.7 do not require a specific fonn
of payment. Therefore, the employer ma\ select any legal form
of payment, so long as payment is made in full on the designated
payday, subject to authorized deductions and legal withholdings.
Acceptable forms of payment include cash, money order,
negotiable checks, and direct deposit into an institution whose
deposits are insured by the United States government or an
institution selected by the employee.
Aiithority'G.S. 95-25.2: 95-25.6: 95-25.": 95-25.19.
.0310 "OTHER AMOUNTS PROMISED" AS
WAGES
"Other amounts promised" as that term js used in G.S. 95-
25.2( 16) are those amounts which the employer has promised or
has a policy or practice of paying. These amounts are wages.
These amounts include, but are not limited to. travel expenses,
holiday pay, birthday pay, jury duty pay, shift premium pay,
prizes, moving expenses, educational expenses, or telephone
expenses.
Aiirhorm'G.S. 95-25.2: 95-25.6: 95-25.7: 95-25.19.
SECTION .0500 - JURISDICTION AND EXEMPTIONS
.0502 COUNTING EMPLOYEES
(a) For th e purpo se of e stablishing juri s diction pursuant to
G.S. 95 25.M(b)(5). a propri e tor or owner who works in and
about his e nt e rpr i s e is not count e d as a p e rson e mploy e d in th e
e nt e rpris e .
(b) With respect to a business set up as a corporation, if an
officer of th e corporation only performs duti e s of an e x e cut i v e
natur e , h e wil l not be count e d as an employee. How e v e r, if an
offic e r p e rforms manag e rial or other non execut i v e duti e s, h e is
an employee of the corporation and will b e count e d for
jur i sdictiona l purposes.
fe-) — With r e sp e ct to partn e rships, a pailn e r who has a
substantial own e rship int e r e st and functions a s a propr ie tor or
own e r will b e tr e at e d a s an e tnploy e r. — Wh e r e th e partn e rship
int e r e st and incid e nc e of own e rship authority ar e d e minimis, a
partn e r will b e count e d as an e mploy ee .
(d) Part tim e e mploy ee s and family m e mb e rs who work in an
e nt e rpris e will b e count e d in d e t e miining th e numb e r of p e rsons
emp l oy e d for juri s dict i onal purpos es .
fe) — Th e numb e r of e mploy ee s at an e nt e rpris e who work
during the cours e of a workyveok. not the number of employees
working on any particu l ar day. deteminos th e wage and hour
jurisdiction for any workweek.
Authority G.S. 95-25.14: 95-25.19.
SECTION .0600 - INVESTIGATION AND
ENFORCEMENT
.0602 INVESTIGATIONS
(a) Inv es tigations will tak e place at such times and in such
plac es as th e Dir e ctor or Division comp l ianc e offic e r s dir e ct. At
th e b e g i nning of an inv e stigation, comp l ianc e officers shall
pr ese nt th e ir cr e d e ntial s to th e own e r, op e rator or ag e nt in charg e
at th e es tablishm e nt, e xplain th e natur e and purpose of th e
inv es tigation. — aftd — indicat e — g e n e rally — the — scop e — of th e
inv e stigation, th e r e cords to b e r e vi e w e d and th e p e rsonnel to b e
qu es tion e d. The Commissioner shall afford the employer an
opportunity to bring to the Commissioner's attention any
information pertinent to the possible violations under
investigation and any computation of wages possibly due an
employee. The employer's failure to timely bring to the
Commissioner's attention such infonnation will not prevent the
Commissioner from proceeding to a determination.
(b) Investigations will b e conduct e d s o far as pos si bl e in a
mann e r which does not unr e asonably di s rupt th e op e rat i on of an
e mploy e r' s es tabl i shm e nt. The Commissioner shall notify the
em ployer of the Commissioner's findings jn accordance with
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681
PROPOSED RULES
Rule .0604 of this Section.
{e) — ln\ e stigations ot" plac e s of e mplo\ m e rit b\ complianc e
otTic e rs will b e initiat e d b) r e qu e sting voluntan coop e ration
from th e e mploy e r. — Wh e n an employer r e fus e s to p e nnit a
complianc e offic e r to e nter and insp e ct an\ plac e of e mploym e nt
and gath e r th e fact s e s s ential to d e t e rmin e whether or not th e
emp l ox e r is a co\ e r e d e stabli s hm e nt, or r e fuses to p e rmit a
com pli anc e offic e r to insp e ct th e plac e of e mploxm e nt. inspe ct
record s , transcrib e r e cords, question e mploy ee s and i nv e stigat e
as nec e ssary to determine wheth e r th e e mploy e r has \ iolat e d
provisions of th e Wag e and Hour .\ct. th e complianc e offic e r
shall att e mpt to determ i n e th e r e ason for such r e fusal. H e shall
imm e diat e! ) r e port the facts to th e Wag e and Hour office in
Ral e igh. — Th e Dir e ctor of th e Wag e and Hour Div ision shall
attempt to gain voluntan coop e ration from th e e mplov e r. W h e r e
voluntary insp e ction is not achi e v e d, th e matt e r will b e r e f e rr e d
to the Chi e f D e putv Commission e r to consid e r an administrativ e
s e arch warrant. If suffici e nt infomiat i on is availabl e from oth e r
s ourc e s, th e D e partm e nt max proce e d to n e gotiat e or litigat e on
b e half of aff e ct e d e mp l ov ee s without furth e r inv es tigation.
{4) — A t th e co n c lu s i on of th e inv e stigation, th e complianc e
ofTic e r shall conf e r with th e e mplov e r or his repres e ntativ e and
advi se him of appar e nt violations and computation s of unpaid
wages d i sc l os e d b \ th e inv e stigation. During such final
conf e r e nc e th e e mplov e r will b e afford e d an op p orf - 'nitv to bring
to th e complianc e offic e r' s att e ntion anv infonnatioi ^e rtin e nt to
the violations and computations. — At th e conclusion of th e
conf e r e nc e th e complianc e ofTic e r shall comp le t e , sign and l e av e
with th e e mplov e r an inv es tigation r e pon which s e ts forth th e
V iolations found and a back wage summary which computes
unpaid wag e s ow e d to e mplov ee s bv th e e mplov e r. — The
complianc e offic e r shall r e qu e st th e e mplov e r to sign th e
(b) Non compliance bv an e mplov e r in making pavment s to
th e e mplov ee und e r a plan rend e rs the agreement v oid and the m
agr ee m e nt mu s t so state. The emplovee and th e commissioner *
max th e n proc ee d to s ee k all back wag es and damag e s due
through th e adm i nistrativ e and l e gal m e thods provid e d bx the
Wag e and Hour Act and the rules and r e gulations promulgated
th e r e under.
Authority G.S. 95-25.16: 95-25.1": 95-25.19: 95-25.22.
.0604 ADMINISTR.ATIVE REMEDIES
(-a-) — Aft e r inv e stigation and computation of the wages due
e mplov ees for violation s of G.S. 95 25.3 (Minimum Wag e ). G.S.
95 25.4 (Overtim e) , a n d G.S. 95 25.6 through G.S. 05 25.12
(Wag e Paxm en t). th e Wag e and Hour Division shall try to
discuss th e violations and computation s with th e emploxer and
trx to r e solv e th e matt e r bx agre e m e nt pursuant to Rul e s .0602
and .060-1 of this Section.
(b) If an agreem e nt cannot b e r e ach e d w ith th e e inplox e r. or
non complianc e bx an e mplox e r nulliti e s an agre e ment, th e
Dir e ctor of th e Wag e and Hour Div ision or oth e r official acting
on his behalf shall notify th e e mploxer:
f+4 that h e max e x e rcis e an opportunity to b e heard xvhich
con s i s ts of and is e x e rc ise d bx th e m e ans provid e d in
(c) of this Rul e :
(3-) that this opportunitx max be waix e d in accordance
with (d) of this Rul e : and
fe-) th e nam e , addr e ss and t e l e phon e numb e r of th e
Dir e ctor of th e Wage and Hour Div ision or oth e r
official acting on h is behalf whom h e must contact.
fe4 — Th e e mplox e r's opportunitx to b e h e ard is an informal
proc e ss xvhich is e x e rcis e d b> communicating his sid e of th e
investigation r e port.
( e ) Complianc e offic e rs shall try to r e ach an agr ee m e nt with
th e e mplov e r conc e rning th e v iolation s and unpa i d wag e s a t the official acti n g on his b e half, bv t e lephon e , i n pe rson or bx letter.
wage and hour disput e and anx information h e d ee ms p e rtin e nt
dir e ctlx to th e D i r e ctor of th e Watj e and Hour Division, or an
final confer e nc e . If th e e mploxer agre es to pax th e back wages
or s om e ponion of th e m, th e e xp e ct e d dat e of paxm e nt i s to b e
sp e cifi e d on th e summatA of unpai d wa ge s. I f a s e ttl e m e nt is not
reached, th e investigation fil e with th e complianc e offic e r's
r e comm e ndations and conclusion s will b e forxvarded to th e
Ral e igh otllc e for furth e r action in accordance xvith Rule .0604
of this S e ction.
AiithoniyG.S. 95-25.15: 95-25.16: 95-25.1': 95-25.19.
.0603 SUPERMSION OF PA^ MEM
(a) Th e Wag e and Hour Div ision max d e v i se . impl e m e nt and
s up e rv i se a plan for th e pavment of unpaid wag es . .A pax m e nt
plan should b e in writing and signed bx th e e mplox e r. — T^
paxm e nt agr ee m e nt should includ e a waiv e r of th e s tatut e of
limitations bx th e e mplox e r in th e e vent the agr ee m e nt b e com e s
void for anx r e ason. .\n e mploxee's sign e d agr ee m e nt to acc e pt
th e amount sp e cif ie d i n th e plan const i tut es a waiv e r bx th e
e mplov ee of th e right to bring an action, or to r e quest the
commission e r to bring an action, in th e G e n e ral Court of .lustic e
for the unpaid wag e s. — Thi s xvaiv e r bx t he e mplox ee must b e
stated in th e w ritt e n plan or agreement.
Wh e n the e mploy e r has so communicat e d to th e Div ision. h e has
fullv e x e rcis e d his opportun i tx to b e h e ard.
{V) Upon r e c e iving notic e und e r (b) of this Rul e , if th e
e mploy e r cannot ad e quat e ly e x e rcis e his opportunitx
to b e h e ard without mor e tim e to pr e par e or if th e
Dir e ctor or oth e r official was not availab le , th e
e mploy e r shall notify th e Wag e and Hour Division by
t e l e phon e , in p e rson or by l e tt e r w ith in t e n dax s aft e r
r e c e iving his notic e that h e int e nd s to e x e rci se hi s
opportunity and s hall r e qu e st th e Division to set a
tim e p e riod. Thi s pr e v e nts automatic waiv e r und e r (d)
of this Rul e .
(24 Upon r e c e iving notice from th e e mplov e r that h e
int e nds to e x e rcis e his opportunity to b e h e ard, th e
Dir e ctor or oth e r offic i al acting on his b e half s hal l
promptlx s e t a reasonabl e tim e p e riod, not to exceed
4^ — dax s . — during — which — the — e mplox e r — must
communicat e with th e Division and s hall so notify th e
e mploy e r. Should th e e mplox e r fail to communicat e
xvith the Dix ision bx th e e nd of th e tim e p e riod so
e stablish e d, th e Dir e ctor or oth e r official acting on his
b e half — may — proceed — te — mak e — at^ — record — a
682
NORTH CAROLINA REGISTER
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13:8
PROPOSED RULES
det e rmination pursuant to ( e ) of this Rul e , or nia\
ord e r a continuanc e for just caus e . — Should th e
e mploy e r fail to e x e rcis e his opportunits to b e h e ard
following th e granting of on e cont i nuanc e , th e
e mp l o\ e r' s r e qu es t may be dismiss e d and th e Division
ma\ proc ee d pursuant to (e) of thi s Rul e .
(d) Th e e mployer ma> waive his opportunity to b e h e ard by
s o stating ora l ly or in writing to th e Wag e and Hour Division.
If th e e mplo\ e r has not e x e rci se d hi s opportunit\ to b e h e ard in
accordance with (c) of this Rul e within 10 daxs aft e r r e c ei ving
notice und e r (b) of thi s Rul e , it will be deemed waiv e d. Wh e n
an emp l oy e r waiv e s his opportunit> to be h e ard, the Divi s ion
ma\ proc ee d in accordanc e with ( e ) of this Rul e .
( e ) Onc e th e e mploy e r has had th e opportunit\ to r e solv e th e
matt e rs at issu e in accordanc e w ith Rul e s .0602 and .0603 of this
S e ction, and to b e heard in accordanc e with (b). (c) and (d) of
this Rule, th e Dir e ctor or official acting on his b e ha l f s hall mak e
and r e cord a determination of the matt e rs. If it is found that th e
e mploy e r has not violat e d th e Wag e and Hour Act or is not liabl e
to an e mplovee. th e n th e matt e r wi l l b e dismiss e d. If it i s found
that th e e mploy e r ha s violat e d th e Wag e and Hour Act or is
liabl e to an emplove e . all administrativ e r e medies have b e en
e xhaust e d and th e Dir e ctor or oth e r official acting on his behalf
sha+k
f+4 notify' th e employ e r that h e has violated th e Wag e and
Hour Act and i s liable to an e mplov ee . If th e original
conclus i ons and computations of th e inv e stigating
complianc e — offic e r — have — been — mod i fi e d. — these
modifications wi l l b e sp e cifically s e t out i n this
not i ficat i on.
(54 proc ee d in accordanc e with Rul e .0605 of th i s
S e ction.
(a) For purposes of G.S. 95-25. 22(g). "exhausting
administrative remedies" means that the Commissioner shall:
(1 ) Inv estigate the alleged violations of the Act and afford
the employer the opportunit\ to present evidence in its
defense during such investigation: and
(2) Notif\ the emploxer and complainant! s). after
completion of the investigation, of:
(A) The violations found and amounts found due;
and
(B) The employer's right to be heard further in the
matter: and
(3) Hear any additional evidence presented by the
employer exercising its right to be heard further as set
forth in Paragraphs (b) and (c) of ihjs Rule: and
(4) Notify the employer of any pending action.
(b) Employers wishing to exercise the right to be heard
further shall:
( 1 ) Notify the Commissioner, within 14 days from the
date the Commissioner notified the employer of the
findings. The 14 days begins on the date the
Commissioner mailed notification to the employer
pursuant to Subparagraph (a)(2) of this Rule. The
employer may notify the Commissioner either orally
or in writing.
(2) Present additional evidence to the Commissioner on
disputed issues within 14 days from the date the
employer notified the Commissioner of jts intent to
exercise the right to be heard further. The employer
may request an extension of time of no more than an
additional 14 days.
(c) The employer shall waive its right to be heard further if jt;
( 1 ) fails to notify the Commissioner in accordance with
Subparagraph (b)(1) of thjs Rule: or
(2) fails to submit evidence in accordance with
Subparagraph (b)(2) of tliis Rule: or
(3) agrees to remedy the violations found and to pay in
full the amounts found due.
(d) If the employ er presents additional evidence in accordance
with Paragraph (b) of this Rule, the Commissioner shall notify
the employer and complainant(s) of any modifications which are
made to the Commissioner's findin gs.
(e) For purposes of G.S. 95-25. 22(g) and tfus Rule, the
Conmiissioner shall make all notifications to tfie iast knoyvn
addresses of the employer and complainants.
AiithorinG.S. 95-25.16: 95-25.1': 95-25.19: 95-25.22.
.0605 LITIGATION
(a) Th e Commission e r of Labor may bring an action in th e
G e n e ral Court of Justice to recover unpa i d wag e s du e an
employee under G.S. 95 25.3 (Minimum Wag e ). G.S. 95 25. 4
(Ov e rtim e ) and G.S. 95 25.6 through G.S. 95 25.12 (Wag e
Paym e nt), wh e n:
(+-) Th e e p i j^loy ee aff e ct e d so r e qu e sts:
(34 Th e commission e r has e xhaust e d th e administrativ e
r e m e di es provid e d und e r Rul e .0604 of this S e ction:
(^-) Th e claims ar e not barr e d by th e two y e ar s tatut e of
limitations provided in G.S. 95 25.22(f): and
{4) Th e act i on request e d is not frivolous.
(b) The Departm e nt of Labor may recommend that employ e es
maintain th ei r own actions to r e cov e r unpaid wag e s and
e x e mplarv ' damag e s in th e G e n e ral Court of Justic e .
fe-) — Complaints by e mploy ee s pursuant to G.S. 95 25.20
all e ging discharg e or discrimination as a r e sult of filing a
complaint or part i cipating in an inv e stigat i on or proc ee ding
und e r th e Wag e and Hour Act hav e priority and will b e
inv e stigat e d within 30 days by th e Wag e and Hour Divi s ion.
Results of such investigation will b e report e d promptly to th e
Commi s sioner for d e termination and l e ga l action.
(d) If an e mployer violat e s provisions of G.S. 95 25.21. th e
Commission e r or his d e signat e d r e pr e s e ntativ e may apply to th e
Magistrat e 's Offic e or District Attorn e y' s Offic e for appropriat e
action. Such criminal r e dr e ss will b e sought only if th e action of
an e mp l oy e r int e ntionally and grossly hinders or d e lays th e
Commission e r — er — h« — d es ignat e d — representativ e — from
inv e stigating or a s certaining any violations or liability of th e
e mploy e r und e r th e Wag e and Hour Act.
Authority G.S. 95-25.15: 95-25.1'
95-25.21: 95-25.22.
95-25.19:. 95-25.20:
SECTION .0700 - CIVIL MONEY PENALTIES
13:8
NORTH CAROLINA REGISTER
October 15, 1998
683
PROPOSED RULES
.0701 CIVIL PENALTIES
(a) An\ emplo\er who \ iolates the provisions of G.S. 95-25.5
(Youth Emplo\ merit). G.S. Q5-25. 15(b) ( Record Keepirm) or afw
o f th e ru le s and r e gulat i ons promulgat e d th e r e und e r in this
Chapte r, these Rules is subject to a civil penalt\ for each
violation.
(b) An_\ person or establishment reqtiired to compl\ with or
subject to regulation of child labor under the F.L.S.A. who
violates the non-e.\empt prov isions of G.S. 95-25.5. or any of the
ru l es and r e gulations promulgat e d ther e under i n this Chapter.
these Rules is subject to a ci\ il penalts for each \ iolation.
(c)
Vet
e amount o f all civi l p e nalti e s
■M+t
b e d e t e rmin e d in
accordanc e with Rul e .0702 of this Section. The Commissioner
shall determine the amount of al] civ il penalties in accordance
w ith Rule .0702 of this Section.
(d) in civil penalty cases, th e Dir e ctor of th e Wag e and Hour
Division the Commissioner shall notifv the emplover by certified
mail of the following:
(1) the nature of the violation;
(2) the amount of the civil penaltv: and
(3) that the civil penalty de t e rminat i on will become be
final, unless within 15 davs aft e r r e c e iving notic e
th e r e of th e e mplov e r charg e d v\ ith a violation and
p e naltv tak es e xc e ption to th e d e t e rmination: and the
emplover takes exception to tHe penalt\' as set forth in
G.S. 95-25.23 and G.S. 95-- \ of the penaltv from
the Commissioner.
f4-) th e proc e dure for taking e xc e ption a s provid e d in Rul e
.0703 of this S e ction.
fe^ — If the e mployer has not filed an e xc e ption to th e civil
p e naltv vs ithin 1 5 days aft e r r e c e iv ing notic e in accordanc e vv ith
(d) of this Ru le , th e p e nalty a s s e ssm en t bv th e Director b e com e s
th e final determination of th e Commi s sion e r of Labor.
Aiithorin-G.S. 95-25.5: 95-25.14: 95-25.1': 95-25.19: 95- G.S.
25.23: 95-25.23.4.
.0702 CIVIL PENALTY ASSESSMENT
(a) If upon inspection or inv e stigation, th e Dir e ctor the
Commissioner finds that an emplover has violated anv of the
prov isions of G.S. 95-25.5. G.S. 95-25. 15(b) or th e rul e s and
r e gu l ations is s u e d ther e under these Rules, th e Dir e ctor of th e
Wag e and Hour Div i sion the Commissioner may assess a civil
penaltv for each violation.
(b) The maximum amount of a civil penalt) will be based on
the nature and the grav it> of the violation or violations. Matters
which are indications of the gravitv of a violation and which
justify maximum civil p e naltv assessm e nt s ar e include, but are
not limited to:
(1)
(2)
(3)
(4)
the likelihood of injur, and the seriousness of the
potential injuries to which a youth has been exposed;
multiplicity of multiple violations bv a business or
emplover;
recurring violations;
emplovment of any youth in a hazardous or
detrimental occupation without a vsaiver from the
Commissioner;
(5) violations involving vouths underl4 years of age; age.
^ a substantial numb e r of hours worked in e xc e ss of the ■
s tatutorv limit s . '
(c) If an e mploy e r violat e s this Chapter bv' e mploying a youth
vsithout a youth empl ovment certificate, a p e naltv for this
particu l ar vio l ati o n The Commissioner shall assess a penalty of:
LU two hundred fifty dollars (S250.00) will be assessed
if the a youth emplovment certificate v\ ould not have
been issued because the emplovment was for a
hazardous or detrimental occupation; occupation.
(2) a — p e nalt> — ef one hundred tvventv-five dollars
(SI 25.00) wi l l b e ass e ss e d if the certificate would not
have been issued, but the employment was
non-hazardous or non-detrimental.
(3) If a c e rtificat e would hav e been issu e d, a p e nalty of
fifty dollars ($50.00) will b e a s s e ss e d for failure to
hav e or if a certificate would have been issued but the
emplover did not have or maintain the certificate.
(d) Reductions in the penaltv amount may be made based on
the size of a business (number of emplovees and gross volume)
and its past record of compliance with v o uth e mplovm e nt
r e quir e m e nts the Wage and Hour Act.
.-iiilhorinG.S. 95-25. T: 95-25.19: 95-25.23: 95-25. 23A.
SECTION .0800 - RECORDKEEPING
.0803 SCOPE OF PROMISED WAGES
For the purposes of G.S. 95-25. 1 3. the tenn " promised wages"
includes all f'omis of yyages as defined in G.S. 95-25. 2( 16). and
anv policv or practice that mav affect the rate, amount or
pavment of wages.
.Authority G.S. 95-25.2: 95-25.13: 95-25.19.
.0804 NOTIFICATION AT TIME OF HIRING
(a) An emplovee's signature on an emplover's written notice
of the promised wages which bears the date on vshich the
emplovee was provided with the notice shall be presumptive
evidence of the emplover's notification in accordance with G.S.
95-25.13(1) and this Rule.
(b) A policv or practice which decreases the emplovee's
wages or has the effect of decreasing the emplovee's wages shall
not appiv to any emplovee until after the emplovee has been
provided with specific oral or written notice of the policv or
practice.
.4iitliorit}G.S 95-25.13: 95-25.19.
.0805 NOTIFICATION DURING EMPLOYMENT
(a) Employers shall satisfS the notice requirements of G.S.
95-25.13(2) by posting or making available to its emplovees in
v\riting all policies and practices relating to promised wages in
a manner, place and time which ensures that emplovees have
readv access to those policies and practices throughout their
tenure with the emplover and are able to use that information.
(b) Acceptable means of ensuring that the policies and
684
NORTH CAROLINA REGISTER
October 15, 199H
13:8
PROPOSED RULES
practices are readily accessible to the employees include, but are
not limited to:
( 1 ) Providing employees with an up-to-date emplo\ee
handbook or other written statement of policies and
practices with regard to promised wa ges:
(2) Proyiding emplosees with paNToll records, including
check stubs, for wages promised in the fonn of hourly
pa\' or salary or other form \\hose terms are readiK
identifiable from the pavroll records.
(c) The emplo\er shall pay the promised wages to the
employee e\en if the employer has failed to comply wjth the
requirements of G.S. 95-25.13(2). For purposes ot~ G.S. 95-
25.13(2) and these Rules, "promised y\ages" includes yvages
promised in accordance w ith an unwritten policy or practice y\ ith
regard to the v\ages. The only exception to this Rule js that an
employer shall not enforce an uny\ritten policy or practice
resulting jn the loss or forfeiture of vacation time or pay,
commissions, bonuses or other forms of calculation. The
employer shall not deny to any employee any vacation time or
pay, commissions, bonuses or other forms of calculation on the
basis of the application of an unwritten forfeiture or loss policy
or practice.
Authorises. 95-25.6: 95-25.": 95-25.13: 95-25.15: 95-25.19.
as 13 NC.4C 13 .0-106. .0409. Notice of RuL'-muking
Proceedings was published in the Register on August 3. 1 998.
Proposed Effective Date: April 1. 1999
A Public Hearing will he conducted at 2:00 p. tn. on November
2. I99H at 4 West Edenton Street, Room 249. Raleigh. NC
2'601.
Reason for Proposed Action: To niodifi- the requirement for
manual resets on high limit controls to apply to high pressure
boilers only.
Comment Procedures: Written comments Mill be accepted
through 5:00 p.m. on November 16. 1998. Written comments
must be delivered or mailed to Ann B. Wall. NC Department of
Labor 4 West Edenton Street. Raleigh. NC 2~601.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars (S5. 000.000) in a 1 2-month period.
CHAPTER 13 - BOILER AND PRESSURE VESSEL
.0806 MEANING OF "MAINTAINED IN A
PLACE ACCESSIBLE"
For the purposes of G.S. 95-25.13(2) and (3) and these Rules,
the phrase "maintained ]n a place accessible" applies to the
posting and to the writing. "Accessible" with respect to posting
means "easily approached and vieysed for reading." at a place
designated for such purposes and regularly frequented tn the
affected employees. "Accessible" with respect to the writin g
means "easily and promptly obtained or yievved for reading" at
a place designated for maintaining such writings.
Authority- G.S 95-25.13: 95-25.19.
.0807 METHODS OF PROVIDING EMPLOYEES
WITH ITEMIZED STATEMENT OF
DEDUCTIONS
The employer may provide the itemized statement required by
G.S. 95-25.13(4) of deductions under G.S. 95-25.8:
( 1 ) in writing: or
(2) by electronic mail, but only if such a transmission is
capable ot" being printed out as a paper copy by the
employee: or
(3) by any other means yvhich supplies the required
information in a form the employees can retain in
written form.
Authority' G.S. 95-25.13: 95-25.19.
SECTION .0400 - GENERAL REQUIREMENTS
.0406 HIGH PRESSURE OR TEMPERATURE
LIMIT CONTROL
(a) Each automatically tired boiler or pressure vessel shall be
protected from overpressurization by tyvo pressure or
temperature operated controls yvhich monitor the upper pressure
or temperature of the ysater. steam, or other fiuid in the boiler or
pressure vessel. At least one of the controls shall be yvired to
interrupt the fuel supply to the burner and stop burner operation,
or for electric boilers to inten'upt the electrical supply to the
heating elements or electrodes, before the maximum pressure or
temperature is exceeded. One of the controls may be used as a
nomial operating control.
(b) In a multiple boiler or pressure vessel installation, where
the pressure or temperature actuated operating control may be
installed in a header or other point common to all boilers and
pressure vessels in the installation, and can be isolated from any
of the boilers or pressure vessels in the installation, the owner or
user shall equip each boiler or pressure vessel with at least one
high-limit control.
(c) For ail high pressure boilers installed after Januan 1.
1 995, and for all high pressure boilers after January 1 , 2000, the
high limit control shall be equipped with a manual reset which
shall prevent the boiler from being fired after the maximum
temperature or pressure has been reached until the operator
resets the switch manually.
N
otice is hereby given in accordance with G.S. 150B-21.2
that the Department of Labor intends to amend rules cited
Authorit\-G.S. 95-69.11: 95-69.14.
.0409
AUTOMATIC LOW-WATER FUEL CUTOFF
13:8
NORTH CAROLINA REGISTER
October 15, 199H
685
PROPOSED RULES
AND WATER-FEEDING DE\ ICE
(a) Each automaticall\ fired steam or \apor s>stem boiler, and
each hot water heating boiler or hot water suppi\ boiler ha\ing
a minimum safet> \ ah e relie\ ing capacity greater than 400.000
Btu hr. shall be equipped with an automatic low -water fuel
cutoff so located as to automaticall_\ cut oft" the fuel suppl> and
stop the operation of the burner before the surface of the water
falls to the lowest safe water line. For electric boilers, the
low-water fuel cutoff shall cut off the electrical suppl\ to the
electric elements or electrodes. The lowest safe water line shall
be that le\el identified b\ the manufacturer which indicates the
lowest safe water le\el for safe operation of the boiler. Low
water fuel cutoff de\ ices embod\ing a float and float bowl shall
be installed so that the boiler feedwater or makeup water can not
be introduced through the float chamber.
(b) Steam and \apor boilers fired b\ the combustion of fuels
and installed after January 1. 1995 and all steam and xapor
boilers fired b> the combustion of fuels after Januar\ 1. 2000
shall be protected b> two low -water fuel cutoffs, one of which
ma\ also be used to regulate the normal water le\el.
(c) The low -water fuel cutoff shall be attached directl_\ to the
boiler or to the water column. Piping from the boiler shall be not
less than one-half inch nominal pipe size. The ends of all
nipples shall be reamed to full-size inside diameter. The
low -water fuel cutoff insta' led in a water boiler s>stem ma\ be
installed an\ where in the s> "m so long as there is no isolation
\al\e installed between the de\ice and the boiler.
(d) For steam and \apor sxstem boilers, low-water fuel cutoff
designs embodying a float and float bowl shall ha\e a \ertical
straightawa\ \aKe drain pipe at the lowest point in the
water-equalizing pipe connections b> which the bowl and the
equalizing pipe can be flushed and the de\ ice tested.
(e) A coil t>pe boiler or a watertube boiler requiring forced
circulation to pre\ent o\erheating of the coils or tubes ma\ ha\e
a flow-sensing de\ice installed at or near the boiler proper, in
lieu of a low-water fuel cutoff, to automaticalK cut off the fuel
suppK when the circulation of flow is interrupted.
(f) For all high pressure boilers installed after Januar\ I.
1995, and for all high pressure boilers after Januan. I. 2000. for
which a low-water fuel cutotTis required b\ this Chapter, at least
one of these de\ ices shall be equipped with a manual reset which
shall pre\ent the boiler from being fired after a low -water
condition until the operator resets the switch manualK.
(g) Automaticall\ fired boilers installed after Januan 1. 1995
and all automatically fired boilers after Januar> 1 . 2000 shall be
pro\ ided with a s\stem to automaticall> maintain a constant
water level so that the water le\el can not fall below the lowest
safe water line.
AiilhorinG.S. 95-69.14.
Notice Is hereby given in accordance with G.S. 150B-21.2
iluii ilie Department of Labor intends to adopt rules cited
as 13 \C.-iC 19 .0101 - .0102. .0201. .0301 - .0302. .0401 -
.0402. .0501 - .0502. .0601 - .0605. .O'Ol - .0~02. Xotice of
Rule-making Proceedings was published in the Register on
.4ugusi 3. 1998.
Proposed Effective Date: .April 1. 1999
A Public Hearing will be conducted at 10:00 a.m. on .\ovember
9. 1998 at .Administrative Office of the Courts Classroom. 322
Chapanoke Road. Raleigh. SC 2''603.
Reason for Proposed .Action: To adopt a set of guidelines for
the initiation, processing, and closing of complaints filed
pursuant to the Retaliatory Employment Discruuinaiion Act.
found at Article 21 of Chapter 95 of the Xonh Carolina General
Statutes.
Comment Procedures: Written comments will be accepted
through 5:00 p.m. on Sovember 16. 1998. Written comments
must be delivered or mailed to .Ann B. Wall. \C Department of
Labor 4 JVest Edenton Street. Raleigh. .\C 2'60!.
Fiscal Note: These Rules do not affect the expenditures or
re\-enues of state or local government funds. These Rules do not
have a substantial ecotmmic impact of at least five million
dollars I S5. 000.000) in a 12-month period.
CHAPTER 19 - RETALIATORY EMPLOYMENT
D1SCRIMIN.4TION
SECTION .0100 - GENERAL PROVISIONS
.0101 WORKPLACE RETALIATORY
DISCR1MIN.4TION OFFICE
The main office of the Workplace Retaliaton. Discrimination
(WORD) Office, which administers the pro\isions ot~ Article 21
of G.S. 95. the Retaliaton Emploxment Discrimination Act
(RED.A). is maintained in the Raleigh office of the Department
of Labor (the Department) at the Old Re\enue Building. 2 South
Salisbury Street. Raleigh. North Carolina. The W ORD Office
maintains branch offices jn Greensboro and Charlotte. North
Carolina. The mailing address of the main office is:
Workplace Retaliatory Discrimination Office
North Carolina Department of Labor
2 South Salisbury Street
Raleigh. North Carolina 27601
Authority G.S. 95-245.
.0102 FOR.MS
Copies ot' current forms used by the WORD Office are
available from the Raleigh office.
Authorin- G.S. 95-245.
SECTION .0200 - DEFINITIONS
.0201 DEFINITIONS
686
NORTH CAROLISA REGISTER
October 15, J99S
13:8
PROPOSED RULES
The foUouing definitions are applicable throughout this
Chapter:
( 1) "Complainant" is a person aliegedh aggrieved bv a
violation of G.S. 95-241. who files a written
complaint with the WORD Office.
(2) "Employee" means those individuals protected from
discrimination or retaliation b\ G.S. 95-241. and
includes but ]s not limited to those individuals defined
as employees in G.S. 97-2(2). G.S. 95-25.2(4). G.S.
95-127(9). miners as defined in OS, 74-24.2.
temporary, leased, or loaned employees, former
employees, jointly employed employees, common layv
employees, and applicants.
(3) "Intervieyy" as used in these Rules includes privately
speaking yvith an employee or witness on company
time on the company premises.
(4) "Open or pending [n the trial court division" as set
forth in G.S. 95-242(e) means the period beginning
with the filing of a written complaint y\ith the
Department and ends with either the Commissioner's
receipt of a final determination by the trial court on
the Commissioner's civil action or closure of the file
according to these Rules, whicheser occurs later.
(5) "Protected activity" or "activity" shall mean and
include all the actions set forth in G.S. 95-24 1(a) and
G.S. 127A-1I1.
(6) "Respondent" is a person, as defined jn G.S. 95-
240( 1 ). against whom a REDA complaint is filed.
Authonn-C.S. 95-245.
.0302 FILING OF COMPLAINTS
(a) A complaint is filed when it is received bv the WORD
Office. The complaint, faxed complaint, amendments, written
authorizations, and faxed authorizations must be received by the
WORD Office yvithin 180 days of the alleged violation.
(b) A complaint may be filed by facsimile as long as a signed
paper copy is received bv the WORD Office yvithin 10 calendar
days of transmittal ot' the fax, if a signed paper copy oi' the
complaint is not received as set foith in thns Rule, the faxed
complaint is subject to administrative closing as set out in these
Rules.
(c) If a complaint is filed by anyone other than the
complainant, including an attomey. the WORD Office must
receive a written authorization, dated and signed by the
complainant alloy\ing such person to file the complaint on the
complainant's behalf The written authorization must be
receiyed by the WORD Office within fO calendar days of receipt
of the complaint. Such complaints not followed by written
authorization are subject to administrati\e closing as set out in
these Rules.
(d) A written authorization may tie filed by facsimile as long
as a signed paper copy is received by the WORD Office y\ithin
10 calendar days of transmittal of the fax. If a signed paper copy
of the written authorization is not received as set forth in this
Rule, the complaint is subject to administrative closing as set out
in these Rules.
(e) Computation of time for filing and other deadlines shall
be in accordance with G.S. 1 A-1. Rule 6(a).
AuthonnG.S. 95-245.
SECTION .0300 - INITIATION OF COMPLAINT
SECTION .0400 - CONDUCT OF INVESTIGATIONS
.0301 CONTENTS OF COMPLAINT
(a) A complaint filed by or on behalf of a complainant must
contain the following information:
Name and address of the complainant:
Name and address ot" the respondent, or other
information y\hich sufficiently identifies the
respondent:
Description of protected activin. trait or status
covered bv REDA;
Description of alleged retaliatory or discriminatory
action;
Approximate date of alleged retaliatory or
discriminatory action; and
Signature of complainant either on complaint fonn or
on supporting documentation allow ing the complaint
to be filed on behalf of complainant.
(b) The complaint may be amended as needed to meet these
requirements.
(c) Complaints and amendments may be filed on a WORD
form or other document containing the information in Paragraph
(a) of this Rule.
.Author in- G.S. 95-245.
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.0401 INVESTIGATION
(a) The Commissioner may, in addition to other actions,
intervieyy witnesses, examine and obtain copies of documents,
and visit yvorkplaces in determining whether or not there is
reasonable cause to believe that the allegations of the complaint
are true.
(b) The respondent has 30 days from notification of the
complaint to respond to tlie allegations of the complaint. The
respondent's failure to timely respond shall not prevent the
investigation from proceeding to a determination.
(c) The complainant shall cooperate during the course of the
investigation. Cooperation shall include, but is not limited to:
( I) notifying the WORD Office, as soon as possible, of
changes in address, name or telephone number;
providing all infomiation requested by the investigator
in the time and manner specified by die investigator;
attending aM meetings or conferences scheduled by
the in\estigator:
meeting reasonable deadlines established by the
investigator;
returning required forms; and
returning telephone calls.
Failure to cooperate may result in dismissal of the complaint
pursuant to Rule .0603 of this Chapter.
i21
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t6j
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NORTH CAROLINA REGISTER
October 15, 1998
687
PROPOSED RULES
AiiihoriiyG.S. 95-245.
.0402 INTERVIEWS
(a) All witnesses shall be interviewed in private, except as
pro\ided in Paragraphs (b) and (c) of this Rule.
(b) Witnesses ma\ be accompanied by their own attorney.
representative, or interpreter.
(c) Witnesses whose statements can legalK bind the
respondent ma\ also be accompanied by the respondent's
attorncN. at the option of the witness.
(2) Complainant's failure to cooperate during the
investigation.
Author in- G.S. 95-245.
.0604 RIGHT-TO-SUE CLOSURE
Upon the issuance of a right to sue letter, the Commissioner
shall close the case file.
Author in- G.S. 95-245.
i
Aiahoniy G.S. 95-245.
SECTION .0500 - RIGHT TO SUE LETTERS
.0501 RIGHT TO SUE LETTERS
A riaht-to-sue letter ma\ be requested b\ the complainant after
a detemiination ot' reasonable cause to believe that the
allegations of the complaint are true and notice of conciliation
failure. The req uest ma\ be granted unless the Commissioner
intends to seek an injunction. Jf the request for a right-to-sue
letter is granted, the case shall be closed.
Authority G.S. 95-245.
.0502 REQL STS FOR RIGHT-TO-SUE LETTERS
Requests for right-to-sue letters made under G.S. Q5-242(c)
shall not be accepted until 180 days after the Filing of the
complaint.
.0605 SETTLEMENTS
Upon settlement of the case and compliance with the tenns of
any approved settlement agreement, the Commissioner shall
close the case file.
.Authority- G.S. 95-245.
SECTION .0700 - SETTLEMENT AND LITIGATION
.0701 SETTLEMENT
Except in those cases where the complaint has been
withdrawn, or a right-to-sue letter has been issued, the
Commissioner shall be made a part\ to all settlements. Upon
compliance with the terms ot' a settlement agreement, the
Commissioner shall issue notification to all parties and close the
case file.
Author in- G.S. 95-245.
Authority G.S. 95-245.
SECTION .0600 - CLOSING OF CASES
.0601 ADMINISTRATIVE CLOSINGS
A complaint mav be administratively closed without
investigation if it does not contain the information specified in
Rule .0301 ot' this Chapter. In the event that the case is
administratively closed, the intended respondent shall not be
notified and the complainant shall not receive a right-to-sue
letter.
Authority G.S 95-245.
.0702 LITIGATION
In determining w hether to file a civil action or issue a right-to-
sue letter, the Commissioner shall consider the interests of both
the public and the individual complainant, if the Commissioner
elects to Hie a civil action, the Commissioner shall control all
aspects of tlie litigation, which shall include the acceptance of
any proposed settlement.
Authority G.S. 95-245.
TITLE I5A - DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES
.0602 WITHDRAWALS
The complainant mav withdraw the complaint, in writing, at
any time prior to the Department's determination that there is
reasonable cause to believe that the allegations of the complaint
are true.
Notice is hereby giyen in accordance with G.S. I5IIB-2 1.2
that tlie DESK - Soil and Water Consen-ation Commission
intends to amend rule cited as 1 5.4 S'C.A C 6E .OIQ~. Sotice of
Rule-making Proceedings was published in the Register on April
15. 1998.
Authority G.S. 95-245.
.0603 RIGHT-TO-SUE DISMISSALS
Complaints may be dismissed and a right-to-sue letter issued
for tlie following reasons:
( 1 ) InsutTicient evidence to support the allegations of the
complaint; or
Proposed Effective Date: April I. 1999
Instructions on How to Demand a Public Hearing Ouust be
requested in writing within 15 days of notice): .Any person
requesting that the Soil and liiiter Conseryation Commission
conduct a public hearing on this proposed amendment must
submit a written request by October 30. 199S to lemon Cox.
688
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
Division of Soil & Water Conservation. PC) Box 2^68"^.
• Raleigh, NC 27611. The rujiiest must specify whicli rule the
hearing is being request on. /( 'ritten requests submitted by mail
must be postmarked no later than October 30. 1998.
Reason for Proposed Action: The rules for the Agriculture
Cost Share Program require an annual spot check of all animal
waste systems funded by the Program for the first five years
after implementation. Because the Division of Soil and Water
Consernition and the Division of Water Qualit}' are already
conducting an annual review atid inspection of systems required
to have a certified waste management plan, the annual check by
the District is no longer necessary to ensure their proper
operation and maintenance. This rule change would include
waste management systems as part of the annual five percent
spot checks that are currently conducted of all cost shared
practices, unless the operation does not have a certified waste
management plan. Cost shared M'aste management practices
for operations under the threshold for requiring annual
inspections and operation reviews, and any other .systems not
requiring a certified plan, would continue to be reviewed
annually for the first five years after implementation
Comment Procedures: .411 persons interested in this proposed
amendment are encouraged to submit written comments.
Comments must be postmarked by November 16. 1998 and
submitted to lemon Cox. Division of Soil ct- Water
Consen-ation. PO Box 27687. Raleigh, NC 27611.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local g( vernment funds. These Rules do
not have a substantial eco::omic impact of at least five million
dollars (85.000.000) in a 12-month period.
CHAPTER 6 - SOIL AND WATER CONSERVATION
COIV1IVIISSION
SUBCHAPTER 6E - AGRICULTURE COST SHARE
PROGRAM FOR NONPOINT SOURCE
POLLUTION CONTROL
SECTION .0100
AGRICULTURE COST SHARE
PROGRAM
.0107 COST SHARE AGREEMENT
(a) The landowner shall be required to sign the agreement
for all practices other than conservation tillage and land
application of animal wastes. An applicant who is not the
landowner may submit a long term written lease or other legal
document, indicating control over the land in lieu of the
landowner's signature, provided the control runs the length of
the life of the practice as listed in the respective Program
Year's Implementation Plan. Signature on the agreement
constitutes responsibility for BMP maintenance and
continuation.
(b) As a condition for receiving cost share or cost share
incentive payments for implementing BMP's. the applicant
shall agree to continue and maintain those practices for the
minimum life as set forth in the Detailed Implementation Plan,
effective the date the BMP's are implemented.
(c) As a condition for receiving cost share payments, the
applicant shall agree to submit a soil test sample for analysis
and follow the fertilizer application recommendations as close
as reasonably and practically possible. Soil testing shall be
required a minimum of every two years on all cropland
affected bv cost share payments. Failure to soil test shall not
constitute noncompliance with the cost share agreement.
(d) As a condition for receiving cost share pa>ments for
waste management systems, the applicant shall agree to have
the waste material anaKzed once ever> vear to detemiine its
nutrient content. If the waste is land applied, the applicant
shall agree to soil test the area of application and to appl> the
waste as close as reasonabK and practicalK' possible to
recommended rates. When waste is land applied, waste
anaKsis and soil testing shall be conducted annually.
(e) The technical representative of the district shall
determine if the practice(s) implemented have been installed
according to specifications as defined for the respective
program year in the USDA-Natural Resources Conservation
Service Technical Guide. Section IV. Raleigh. North Carolina,
or according to specifications approved by the division for
district BMP's. The district shall be responsible for making an
annual spot check of five percent of ail the participating farms
to ensure proper maintenance. Waste manag e m e nt syst e ms
will r e c e iv e annual status r e views for five years following
imp l em e ntation. Waste management systems shall be
included as part of the annual five percent check except for
systems on farms without certified waste management plans.
in those cases, the systems will receive annual status reviews
for five years following implementation.
(f) If the technical representative of the district determines
that a BMP for which program funds were received has been
destroyed or has not been properly maintained, the applicant
will be notified that the BMP must be repaired or re-
implemented within 30 working days. For vegetative
practices, applicants are given one calendar year to re-
establish the vegetation. The district may grant a prescribed
extension period if it determines compliance can not be met
due to circumstances bevond the applicants control.
(g) If the practices are not repaired or reimplemented
within the specified time, the applicant shall be required to
repay to the division a prorated refund for cost share BMP's as
shown in Table 1 and 100 percent of the cost share incentive
payments received.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
689
PROPOSED RULES
Table 1
PRORATED REFUND SCHEDULE FOR NONCOMPLIANCE
OF COST SHARE PAYMENTS
{
Percent Age of Practice Life
10
20
30
40
50
60
70
80
90
100
Percent Refund
100
95
89
82
74
65
55
44
31
17
(h) An applicant, who has been found in noncompliance
and w ho does not agree to repair or reimplement the cost
shared practices, and a District ma\ jointl) request the
commission to infomialK mediate the case. To invoke this
method of mediation, both parties must stipulate that the
commission mediation is binding.
( i ) An applicant shall have a maximum of 1 80 davs to make
repav. "nt to the division follow ing the final appeals process.
(j) The inabilitv to properK maintain cost shared practices
or the destruction of such practices through no fault of the
applicant shall not be considered as noncompliance with the
cost share agreement.
(k) When land under cost share agreement changes owners
the nevs landowner shall be strongK encouraged bv the district
to continue and maintain practice(s) previously implemented.
Authority U.S. 139-8: 145-215. '4.
TITLE 17 - DEPARTMENT OF REVENUE
Notice is hereby given in accordance with G.S. 150B-21.2
that the Department of Revenue intends to amend rules
cited as H NCAC 4B .0302.'. 0306. .0308. .0310 -.0312. .2902.
.2903: 4E.0201. .0302. .0'03: 4F .0005: and repeal 4B .0102.
.0104 -.our. .0301. .0309. .0403. .0405. .4301. .4302: 4E
.0102. .0103. .0202. .0203.
Editor's Note: G.S. 150B-lld)(4) exempts the Department of
Revenue from Part 2 Article 2A of Chapter 150 with respect to
the notice and hearing, requirements. The Department will
however publish the text of proposed rules in the Sorth Carolina
Register prior to the scheduled time of review by the Rules
Review Commission.
Proposed Effecti\ e Date:
r SC.AC 4B.0102. .0104 -Onr. .0301. .0302. .0306. .0308-
.0312. .0403. .0405. .2902 - .2903. .4301 - .4302 - July I. 1999
r \CAC 4E .0102 - .0103. .0201 - .0203. .0302. .0'03: 4F
.0005 - May 1. 1999
Instructions on How to Demand a Public Hearing imust be
requested in writing within 15 days of notice): A person may
request a public hearing by sending a written request for a
hearing to Mr Jay Hare. Corporate. Excise, and Insurance Tax
Division. PO Box 871. Raleigh. NC 27602-871. by November
16. 1998. Notice of any hearing scheduled on these proposed
repeals will be published in the Register
Reason for Proposed .Action:
/ 7 NCAC 4B .0102, .0104 - .0107 - Senate Bill 1252 revised
the State privilege license taxes. The revisions repealed the pro-
ration of tax. repealed the license tax (but not the gross receipts
tax associated with the license), and consolidated the
exemptions into one statute. The rules that are repealed here
either conflict with or restate the revisions and are therefore
either obsolete or unnecessaiy.
17NCAC4B .0301 - Senate Bill 1252 revised the State privilege
license taxes. The revisions repealed the pro-ration of tax.
effective July 1. 1999. This rule will therefore be obsolete on
that date.
1 7 NCAC4B .0302 - Senate Bill 1252 revised the Slate privilege
license taxes. The revisions repealed the pro-ration of tax.
repealed the license tax (but not the gross receipts tax
associated with the license), and consolidated the exemptions
into one statute. Many privilege license rules are no longer
needed as a result of that legislation. This amendment
consolidates this rule and 4B . 0403 and . 0405 so the remaining
rules will not be so scattered in the Code.
17 SC.AC 4B.0306 - Senate Bill 1252 consolidated and revised
the exemptions to the State privilege license taxes This
atnendtnent reflects those changes.
1 7 NC.4C 4B .0308. .0310 - .0312 - Senate Bill 1252 repealed
the State license tax for most of the privilege license taxes,
leaving the gross receipts tax on amusements. These rules are
amended to delete references to the obsolete license tax.
17 .\CAC 48 .0309 - Senate Bill 1252 revised the Stale
privilege license taxes. The revisions repealed the pro-ration of
690
NORTH CAROLINA REGISTER
October 15. 199H
13:8
PROPOSED RULES
tax. repealed the license tax (hut not the gross receipts tax
associated with tlie license), and consolidated the exeirptions
into one statute. Many privilege license tax rules are no longer
needed as a result of that legislation. Some of the remaining
rules are being consolidated so the rules will not be so
scattered. This rule is repealed because it is incorporate in
amended 4B.030S.
1 7 AC.-IC 4B .0403, .0405 - Senate Bill 1252 revised the state
privilege license taxes. The revisions repealed the pro-ration of
tax. repealed the license tax ( but not the gross receipts lax
associated with the license), and consolidated the exemptions
into one statute. Many privilege license tax rules are no longer
needed as a result of that legislation. These rules are repealed
because their content is consolidated with revised rule 4B. 0302
so the remaining rules will not be so scattered in the code.
1 7 SCAC 4B .2902 -.2903 - Senate Bill 1252 revised the Sate
privilege license taxes. The revisions repealed the license
portion of the installment paper tax and increased the
installment paper percentage tax rate to keep the tax revenue
from the tax the same. The changes to these rules reflect the
changes made by the legislation.
1 7 .\C.4C 4B .4301 - .4302 - Senate Bill 1252 revised the State
privilege license taxes. The revisions repealed the pro-ration of
tax. repealed the license tax (but not the gross receipts tax
associated with the license), and consolidated the exemptions
into one statute. .4s a result of that legislation, all the privilege
license lax rules were reviewed. These two rules repeat the
statutes for the most part and are unnecessaiy even if they were
not ref ctitious.
1 7 SCAC4E.OI02 - .0103 - Senate Bill 1252 repealed the beer
and wine privilege license taxes, effective May 1, 1999. end left
in place the beer and wine excise taxes. These rules adcress the
beer and wine privilege license taxes and are therefore obsolete.
1 7 ^CAC 4E. 0201 - Senate Bill 1252 repealed the Slate beer
and wine privilege taxes, effective Ma}- 1. 1999. and left the beer
and wine excise taxes. This rule needs to be changed to reflect
these changes and to correct the name of the Division within the
Department that receives the beer and wine tax reports.
1 7 ^C.AC 4E.0202 - .0203 - Senate Bill 1252 repealed the beer
cmd wine privilege license taxes, effective May 1. 1999. and left
in place the beer and wine excise taxes. .4s a result of that
legislation, all of the beer and wine privilege license and excise
tax rules were reviewed. These two rules are repetitious of the
statutes for the most part and the part in .0202 about the
Examiner's report is out-of-date. The rules therefore need to be
repealed.
1 7 ISCAC 4E.0302 - This is a technical change to eliminate the
double reference to taxpaid beverages.
17 .\C.4C 4E .0703 - This amendment deletes the word "malt"
and substitutes the word "beer".
17 ISCAC 4F .0005 - This amendment revises the statute to
reflect changes made to the law since 1991.
Comment Procedures: liritten comments may be submitted to
Mr Jay Hare at .\orth Carolina Department of Revenue.
Corporate, Excise, and Insurance Tax Division, PO Box 871,
Raleigh. NC 2' 602. Comments received will be taken into
consideration. Ifvou have questions, vou mav call Mr Hare at
919--33-1352. ' '
CHAPTER 4 - LICENSE AND EXCISE TAX DIVISION
SUBCHAPTER 4B - LICENSE TAXES
SECTION .0100 - GENERAL ADMINISTRATION
.0102 TRANSFER FEE
Th e fiv e do l lar (S5.00) transf e r f ee cannot b e prorat e d.
Authorit}- a.S. 105-33: 105-262.
.0104 REFUNDS
Pr i vilei; e lic e ns e s to b e r e fund e d for ov e rpayment of tax shall
be r e turn e d with th e r e fund r e qu e st if in the poss e ssion of th e
ta\pa\ e r.
Authority- a.S. 105-33: 105-262: 105-266: 105-266.1.
.0105 CHURCHES OR CHARITABLE
ORGANIZATIONS
No church or charitable organization is e x e mpt from paym e nt
of pr i vil e ge lic e ns e tax wh e n e ngaging in an oth e rwi se taxable
activity.
Authorities. 105-33: 105-262.
.0106 CEDED AREAS
Th e stat e ha s no power to collect privilege license taxes on
bus i n e ss e s carri e d on entireU w ithin an ar e a c e d e d by th e Stat e
of North Carolina to th e federal governm e nt.
Authority- G.S. 105-33: 105-262.
.0107 BLIND PERSONS
Blind p e rsons who qualify und e r G.S. 105 219 are e xempt
from th e paym e nt of pr i vil e ge licenses. The Stat e Commission
for the Blind certifi e s to th e R e v e nue
p e r s on s
who quality ' with said commission for thi s e x e mption. Whi le vv e
do not actualK i s su e an exempt lic e ns e , w e honor th e
commi s sion's c e rtificat e to us and also th e c e rtificat e is s u e d by
a qualified phvsic i an or optom e trist, as provid e d und e r
Subs e ction (d) of G.S. 105 249.
Authority- G.S. 105-33: 105-249: 105-262.
SECTION .0300 - AMUSEMENTS NOT OTHERWISE
TAXED
.0301
NOT PRORATED
Lic e ns e s for amu se m e nts not otherwi se tax e d may not b e
prorat e d and is s u e d for on e half y e ar.
Authority G.S 105-3'. 1: 105-262.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
691
PROPOSED RULES
(a) A go cart rac e for which an admis s ion is charg e d to the
sp e ctators is subj e ct to th e lic e ns e and thr ee p e rc e nt gross ^
r e c e ipt s tax imposed und e r G.S. 105 37.1. *
(b) If a person op e rat e s a go cart traciv wh e r e sp e ctator f ee s
ar e not charg e d, but a f ee i s charg e d to individuals for th e us e of
th e track for th e ir own entertainm e nt, th e f ee s ar e not subject to
th e gros s r e c e ipts tax.
.0302 COMPUTATION AND PAYMENT OF GROSS
RECEIPTS TA.XES
(a) Th e thr ee p e rcent gross rec e ipts tax is computed upon th e
e ntire admi s sion pric e l es s the f e d e ral tax. if any. — Th e thr ee
p e rc e nt is not to b e d e ducted in ord e r to arriv e at th e tax ba se .
(b) Form B 205. R e port of Gross R e c ei pts Tax. is u se d to
rei n i l t h e thr ee p e rc e nt gross r e c e ipt s tax on amus e m e nts. This
r e port s hal l b e til e d within the t1rst 10 da>s of e ach month Aulhorin- <JS. 1(13-3' I: 105-262.
covering gros s r e c e ipt s for the prec e ding month, unl e ss th e
op e ration is of a t e mporan natur e , th e n t he tax is du e at th e clo se
of operat i on.
(a) Computation. -- The gross receipts taxes imposed b\ G.S.
105-37.1 and 105-38 on amusements are computed on the
admission price of the amusements, less am federal tax included
in the admission price. Gross receipts taxes are not deducted
from the admission price to detemiine the tax base. When an
amusement does not charge an admission price but those
.0310 FISHING PIERS
If sp e ctators ar e charg e d admission to a fishing pi e r, liability
will b e du e und e r G.S. 105 37. 1 for th e lic e ns e and thr ee perc e nt
gross r e c e ipts tax on such sp e ctator admission f ee s. — Wh e r e
admissio n charge d is for tlshing. no part of such charg e is
subj e ct to liability und e r G.S. 105 37.1. If a charge is made for
fishing and a s e parat e charg e mad e for t he sp e ctators, th e
s p e ctator f ee onN shall b e subj e ct to tax und e r G.S. 105 37.1.
admitted are asked to make a \oluntar\ contribution, the gross
receipts taxes appK to the voluntary contributions received.
(b) Payment. The gross receipts taxes imposed b\ G.S. 105-
37.1 and 105-38 must be reported to the Secretary on Form B^
205. Taxes pa\ able b\ a continuing amusement are due b\ the
10'*' day after the end of each month. Taxes payable by a
temporary amusement are due yvhen the amusement closes.
An admission charge to a fishing pier js subject to the gross
receipts tax imposed under G.S. 105-37.1 if the charge is for
being a spectator on the pier .An admission charge to a tlshing
pier is not subject to the tax If the charge js for tlshing on the
pier. If one charge is imposed for being a spectator and another
is imposed for fishing, only the charge for being a spectator is
subject to the tax.
AiiihoriiyC.S^ 103-3' J: 105-3<S: 105-262.
.0306 CIVIC ORGANIZATION AMUSEMENTS
Ex e mption of th e gro s s r e c e ipts tax on The exemption in G.S.
105-40 for the first one thousand dollars (SI, 000) of receipts
derived from danc e s and oth e r amus e m e nts actually promot e d
and manag e d by civic organizations and private and public
se con da ry s choo ls — is applicable to e ach such danc e or
amu se m e nt a s a se parat e e v e nt . by a civic organization from a
dance or another amusement promoted and managed by the
organization applies separately to each dance or other
amusement.
.Author in- G.S. 105-3'.!: 105-38: 105-40: 105-262.
.0308 DRAGSTRIPS AND GO-CART RACES
A drag strip operation or a go-cart race for which an
admission is charged to the spectators is subject to l i ab i l i ty the
gross receipts tax imposed under G.S. 1 05-37. 1 . Th e lic e ns e f ee
und e r this S e ction is tr e at e d as an advanc e paym e nt upon th e
thr ee p e rc e nt gros s r e c e ipt s tax du e on th e adm i s s ion charg e s.
Form B 205. R e port of Gross R e c e ipts Tax. is due monthly, not
late r t han th e t e nth of th e month. Wh e n If a person operates a
drag strip is op e rat e d or a go-cart track w here spectator fees are
not charged, but a fee is charged to-the indiv iduals for the use of
the strip or track for their own entertainment, the fees are not
subject to the gross receipts tax.
.Author in G.S. 105-3'. 1: 105-262.
.Authorit)- G.S. 105-3'. 1: 105-262.
.0311 HORSE AND DOG SHOWS
Conducting a hors e or dog show for which an admission f ee
is charg e d i s s ubj e ct to th e priv il e g e lic e ns e and gross r e c e ipts
tax und e r G.S. 105 37.1 unl e ss th e e v e nt qualifies for e x e mption
und e r G.S. 105 10. An admission charge to a horse or dog show
is subject to the gross receipts tax imposed under G.S. 1 05-37. 1 .
.Authorit}- G.S. 105-3'. 1: 105-262.
.0312 RATTLESNAKE MILKINGS
A rattlesnake milking exhibition for which a fee is charged is
subject to lic e ns e and the gross receipts tax imposed under G.S.
105-37.1.
.Authority- G.S. 105-3'. 1: 105-262.
SECTION .0400 - AMUSEMENTS: CIRCUSES:
MENAGERIES: WILD WEST: DOG
AND PONY SHOW S: ETC.
.0403 REPORT OF GROSS RECEIPTS TAX
Form B 205. R e port of Gross R e c e ipts Tax. is us e d to r e mit
the thr e e percent gross r e c e ipts tax on amus e m e nt s und e r G.S.
105 38. This r e port shall b e fil e d within th e first 10 davs of e ach
month cov e ring gross r e c e ipts for th e pr e c e ding month, unl e ss
the op e ration is of a t e mporary natur e , then th e tax is du e at th e
c l os e of op e ration.
.0309 GO-CART RACES
.Authority- G.S. 105-38: 105-262.
692
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
practic e of any prof e ssion, business or trad e for which a state
.0405 EXPECTED CONTRIBUTION qualification lic e n se is r e quir e d.
The lic e ns e and gross receipts tax l e vi e d und e r G.S. 105 38 is
appl i cable to trav e ling shows and e xhibitions which, instead of Aitlhorin- G.S. 105-33: 105-104: 105-262.
an admission charg e , r e qu e sts sp e ctators to make a voluntary
contribution.
.Auihohn- G.S. 105-38: 105-104: 105-262.
SECTION .2900 - INSTALLMENT PAPER DEALER
.2902 LIABILITY FOR DIRECT LOANS
If a p e r s on A person who makes direct loans and who also
bu\ s installment pap e r, h e paper is subject to privil e g e lic e n se s
uttiier both G.S. 105-83 and G.S, 105-88.
Authority G.S. 105-83: 105-88: 105-262.
.2903 QUARTERLY REPORT
Form B-203. installment Paper Dealer QuarterK Report, is
used to remit the tax of t37^ .277 percent of the total face value
of paper subject to liability under G.S. 105-83.
Authorit}G.S. J05-83: 105-262.
SECTION .4300 - MANNER OF OBTAINING
LICENSES FROM SECRETARY OF REVENUE
.4301 APPLICATION FOR PRIVILEGE LICENSE
Fomi B 202. th e pr e addr es s e d applicat i on for privil e ge
lic e ns e , is mail e d th e e ar l y part of Jun e to th e address of the
pr e c e ding y e ar's lic e ns e . Form B 202A. th e nonpr e addr e ss e d
application for privil e ge l i cense. ma> b e obtain e d e ith e r bv
writing to North Carolina D e partm e nt of Revenu e . Busin e ss
Lic e ns e and R e turns Unit. PO Box 25000. Ral e igh. NC 27640.
or b\ contacting a branch offic e of th e D e partm e nt of R e v e nu e .
Eith e r form may be used i n mak i ng an application for a privil e g e
lic e ns e . Remittanc e of tax du e must accompany an\ application
for lic e nse.
Authority G.S. 105-104: 105-262.
.4302 PRIVILEGE LICENSE
A privil e g e lic e ns e i s i s su e d for each tvp e lic e ns e purchas e d.
Such a lic e ns e i s e vid e nc e that the pr i vil e g e lic e ns e tax is paid
for th e privil e g e of carry ing o n th e business as d e scrib e d on th e
lic e ns e . — How e v e r, this lic e nse alone do e s not authoriz e th e
SUBCHAPTER 4E - ALCOHOLIC
BEVERAGES TAX
SECTION .0100 - LICENSES
.0102 APPLICATION FOR LICENSE
Application — for Stat e alcoholic — b e v e rag e comm e rcial
lic e ns e s und e r G.S. 105 113.7 4 . Stat e beer and win e r e tail
lic e ns e s und e r G.S. 105 1 13.75. and Stat e railroad alcoholic
b e v e rag e sal e s lic e ns e under G.S. 105 1 13.76 shall b o fil e d
with th e North Carolina Departm e nt of R e v e nu e . Offic e
Examination Division. Busin e ss Lic e ns e and R e turns Unit.
Ral e igh. North Carolina, on or b e for e May 1 of e ach y e ar
with r e mittanc e of lic e n se tax applicabl e . In th e cas e of n e w-
op e ration s b e ginning aft e r May 1. l i c e ns e s shall b e purchased
b e for e sal e s ar e mad e .
Authority G.S. 105-113. ~0 through 105-113. 79: 105-262.
.0103 PENALTY
P e nalty accru e s at th e rat e of fiv e perc e nt for each and every
30 dav'S or fraction th e r e of (not to e .xc ee d 50 p e rc e nt) that th e
lic e ns e tax r e mains unpaid from the dat e du e and payabl e .
Application for r e n e wal of l ic e ns e should b e fil e d on or
b e fore May 1 in jrd e r to avoid p e nalty.
Authority G.S. 105-113.89: 105-262.
SECTION .0200 - MONTHLY REPORTS: PAYMENT
OF TAX
.0201 FILING OF MONTHLY REPORTS
Monthly reports, as follows, provided bv the Secretary of
Revenue. shaH must be filed v\'ith the North Carolina Department
of Revenue, lic e ns e and e xcis e tax division. Office Examination
Division. Business License and Returns Unit. Raleigh, North
Carolina, on or before the 15th da\ of each month covering
transactions in alcoholic beverages for the preceding month b\
those licens ees taxpavers required to file, together with
remittance of tax where applicable:
Report Form To Be Filed B>
( 1 ) B-C-7 1 Resident beer wholesaler and importer.
(2) B-C-7 15 Beer manufacturer and nonresident wholesaler,
(3) B-C-76] Dealers on trains (beer sales).
(4) B-C-775 A. B.C. Boards.
(5) B-C-776 Dealers on trains (spirituous liquor sales),
(6) B-C-780 Dealers on trains (unfortified wine sales).
(7) B-C-783 Resident unfortified w ine wholesaler and importer,
(8) B-C-784 Resident fortified w ine wholesaler and importer.
With Tax
X
X
X
X
X
X
X
13:8
NORTH CAROLINA REGISTER
October 15, 1998
693
PROPOSED RULES
(9) B-C-787 Unfortified wine manufacturer and nonresident wholesaler,
( 10) B-C-788 Fortitled wine manufacturer and nonresident wholesaler.
(11) B-C-796 Nonresident shippers of bulk \\ ine to authorized resident bottlers.
Authoritv G.S. 105-113.76; 105-113.83: 105-113.84: 105-262.
.0202 EXAMINER'S REPORT
Month l y e xc i s e tax r e ports ar e e xamin e d. Th e B e v e rag e Tax
Examin e r's R e port. Fonn B C 71 1. is mail e d th e taxpay e r to
i ndicat e errors and th e e ff e ct th e e rrors hav e on th e tax liabilit\.
A dd iti ona l tax liabil i lx is subj e ct to p e nalty according to G.S.
1 05 23 6 — attd — inte r es t — at — the — rate authoriz e d — und e r G.S.
105 2 1 1.1( 1 ) p e r month or fraction of a month.
AiahoniyG.S. 105-113.89: 105-262.
.0203 SEPARATE REPORTS FOR WINES
Separat e r e port s shall b e fil e d h\ th e r e s i d e nt whol e sal e r or
i mport e r sinc e both th e tax rat e s and th e portion of th e tax
distribut e d to local gox e rnment s diff e r
Authority (J. S. 1 05- 1 1 3. SO through 105-113.83: 105-262.
SECTION .0300 - SPOILAGE: BREAKAGE AND
DESTRUCTION
228.30. The address for mailing the report is: North Carolina
Department of Revenue. Business License and Returns Unit.
Conveyance Tax Section. PQ Box 25000. Raliegh. NC 27640-
0001.
Aurhorit^■ G.S. 105-228.30: 105-262.
Notice is hereby given in accordance with G.S. 150B-21.2
thai the Department ofRe^•emle intends to repeal rule cited
us r NCAC 6B .0105.
Editor's Note: G.S. I50B-Iidl(4) exempts the Department of
Revenue from Part 2 Article 2 A of Chapter 150 with respect to
the notice atid hearing recpiirements. The Department will
howe\-er publish the text of proposed rules in the North Carolina
Register prior to the scheduled time of review' by the Rules
RevicM' Commission.
.0302 SPOILAGE OF TAXPAID BEER OR WINE
Spoi l ag e or br e akag e of an\ "taxpaid" b ee r or uin e er
Spoilage, breakage, or other losses of an\ taxpaid beer or wine
in an\ oth e r mann e r cannot be claimed as a deduction from the
excise tax due.
Authority G.S. 105-113.81: 105-262.
SECTION .0700 - DISTRIBUTION OF MALT AND
WINE EXCISE TAX TO LOCAL GOVERNMENTS
.0703 QUESTIONNAIRES
Annual questionnaires are mailed to each county (Form
B-C-708) and each municipality (Form B-C-797) in order to
obtain information necessary to determine their distributable
share of malt. beer, unfortified vs ine. and fortified w ine excise
taxes.
Authority- G.S 105-113.82: 105-262.
SUBCHAPTER 4F - EXCISE STAMP TAX ON
CONVEYANCES
.0005 CONVEYANCE TAX (EXCISE TAX ON
DEEDS) REPORT
The county finance officer shaH must file Fomi
R-
[Conveyance Tax (Excise Tax on Deeds) Report] with the
Department on or before the 20th dav of e ach month with
r e mittanc e co\ e ring on e half of th e n e t proc ee d s r e c e iv e d from
th e conv o vanc e tax for th e pr e c e ding month, after the end of
each calendar quarter and remit the tax due under G.S. 105-
Proposed Effective Date: April I. 1999
Instructions on How to Demand a Public Hearing: (must be
requested in writing within 15 days of notice): A person may
request a public hearing by sending a written request for a
hearing to Mr Sam McEwen. Personal Tax Division. PO Box
8'1. Raleigh. NC 2'602. by November 16. 1998. Notice of any
public hearing scheduled on this proposed repeal will be
published in the register
Reason for Proposed Action: The Department is revising its
forms so they can be processed on »tnr equipment, and this rule
is not needed.
Comment Procedures: li ritten comments may be submitted to
.Mr Sam McEwen at North Carolina Department of Revenue.
Personal Tax Division. PO Box 8' 1 . Raleigh. \C 2 '602.
Comments received will be taken into consideration in adopting
the permanent rule. If you have questions, you may call Mr
McEwen at 919--33-3565.
CHAPTER 6 - INDIVIDUAL INCOME TAX DIVISION
SUBCHAPTER 6B - INDIVIDUAL INCOME TAX
SECTION .0100 - FILING INDIVIDUAL INCOME TAX
RETURNS
.0105 REPRODUCED COPIES
Th e d e partm e nt will acc e pt reproduced copi es of th e North
Carolina i ndividual income tax. fiducian.. and partn e rship
694
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
returns — provid e d — the — r e productions — meet — the — tbi lowing
r e quirements:
f+^ Th e color must b e whit e or th e co l or of tii e
departm e nt' s forms.
(34 The pap e r w e ight must bo e qual to or b e tt e r than th e
d e partm e nt's forms.
(^ Th e fomi ma\ b e r e produc e d on on e s id e or both sid e s
of th e pap e r, but th e pag es s ha l l b e stapl e d tog e th e r at
the top.
f+) Th e taxpay e r must sign the r e produced form. — A
r e product i on of th e s ignatur e is not acc e ptabl e .
{%r) The i nfomiation mu s t be l e gibl e and must b e of a t\p e
that will not fad e for a p e riod of at l e a s t 1 \ e ars. Th e
d e partm e nt — r ese r\ 'e s — the — r+ght — te — r e ject — am-
r e production s w it h poor l egibility-.
AulhoriivG.S. 1()5'I55: 105-251: 105-252: 105-262.
wwwwwwwww
•K tt y: tt K
Notice is hereby given in accordunee with G.S. 150B-2 1.2
ihat the Department of Revenue intends to repeal rules
cited as 1 ' NC.4C 7B . 0124 - . 0125.
Editor's Note: G.S. 150B-l(dl(4l exempts the Department of
Revenue from Part 2 .Article 2.4 of Chapter 150 with respect to
the notice and hearing recpiirements. The Department will
however publish the text of proposed rules in the North Carolina
Register prior to the scheduled time oj review by the Rules
Review Commission.
Proposed Effective Date: .4pril 1. 1999
Instructions on How to Demand a Public Hearing imust be
requested in writing within 15 days of notice): .4 person may
request a public hearing by sending a written request for a
hearing to Mr Timothy Holmes. Sales and Use Tax Division.
PO Box 871, Raleigh. NC 27602. by November 16. 1998.
Notice of any public hearing scheduled on this proposed repeal
will be published in the Register
SUBCHAPTER 7B - STATE SALES AND USE TAX
SECTION .0100 - GENERAL PROVISIONS
.0124 ERRONEOUS INFORMATION
Th e stat e is not s topp e d to coll e ct the r e tail sales or us e tax
l e vi e d by G.S. — 1 05 161.1 — b\ r e ason of an ag e nt of the
D e partm e nt of R e v e nu e e rron e ou s ly advising th e m e rchant that
c e rtain s al e s are not subj e ct to th e tax.
.4 lit hor it}- G.S. 105-164.4: 105-164.6: 105-262.
.0125 FLEA MARKETS
<*) Ev e n person who sel l s tangibl e p e rsonal prop e rty at a fl e a
mark e t, oth e r than hi s own hous e hold p e rsonal prop e rty, is
r e quir e d to obtain a M e rchants C e rtificate of R e gistration
Lic e ns e to e ngag e in and conduct such busin e ss. When making
sal e s at th e fl e a mark e t such p e rson shall conspicuously disp l ay
th e lic e n se or shall display a r e c e ipt from the D e partm e nt of
R e \ e nu e showing that h e has appli e d for th e lic e ns e in cas e s
wh e r e h e has not \ e t r e c e iv e d th e l i c e ns e . Every person who
s e lls onK his own hous e hold p e rsonal prop e rty at a fl e a mark e t
mu s t c e rt i fy in writing to th e person from whom h e l e as es or
r e nts spac e that h e ysill sell only hi s oyvn hous e hold p e rsonal
prop e rty and wh e n selling tangible p e rsonal propoity at th e fl e a
mark e t must conspicuously display a copy of th e yvritt e n
statem e nt.
fb4 A p e rson yvho leas e s or r e nt s spac e to oth e rs at a fl e a
mark e t shall k e ep r e cord s of r e tail e rs to yvhom h e ha s l e as e d or
r e nt e d spac e at th e fl e a mark e t. Such r e cords shall includ e :
f4-) th e dat e .
(2) th e nam e and addr e s s of th e l es s ee
(^ th e sal es and u se tax r e gi s tration numb e r of the l ess e e
or th e r e c e ipt numb e r and th e name of th e R e v e nu e
Offic e r issuing th e r e ceipt in cases yvhere the less ee
has applied for but has not y e t r e c e iv e d the Merchants
Certificat e of R e gistration Lic e n s e, and
(4-) a copy of th e c e rtifi e d stat e m e nt of v e ndor s yvho s e ll
on l y th e ir own hous e hold p e r s onal prop e rty y\h e r e v e r
applicabl e .
Reason for Proposed Action: 17 i\CAC 7B .0124 - This rule
repeats the holding in the court case of Henderson v_ Gill, and
is therefore unnecessary.
17 NCAC 7B .0125 - This rule repeats G.S 105-164.4 and is
therefore unnecessaiy.
Comment Procedures: Written comments may be submitted to
Mr Tim Holmes at North Carolina Department of Revenue.
Sales and Use Tax Division. PO Box 8^1. Raleigh. NC 2~602.
Coimnents received will be taken into consideration in adopting
the permanent rule. If you ha\-e questions, you may call Mr
Holmes at 919-''33-21 51.
CHAPTER 7 - SALES AND USE TAX
.4uihorinG.S 105-164.3(1): 105-164.4: 105-164.6: 105-262.
WWKWWXWWWWWWW
K W W K W W
Notice is hereby given in accordance with G.S. 150B-21.2
thai the Department of Revenue intends to repeal rule cited
as rNC.4C9K.0601.
Editor's Note: G.S. 150B-l(dl(4) exempts the Department of
Revenue from Part 2 .4rticle 2.4 of Chapter 150 with respect to
the notice and hearing requirements. The Department will
however publish the text of proposed rules in the North Carolina
Register prior to the scheduled time of review by the Rules
Review Commission.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
695
PROPOSED RULES
Proposed Effective Date: April I. 1W9
Instructions on How to Demand a Public Hearing (must be
requested in wriiing within 15 days of nuticei: A person men-
request a public hearinii by sending a written request for a
hearing to Ms. Jan Slussen Motor Fuel Tax Division, at PO Box
8"!. Raleigh. .\C 2''6U2. by \orember 16. 1998. Soticeofany
public hearing scheduled on this proposed repeal will be
published in the Register.
Reason for Proposed Action: The rule repeats G.S. 105-
449.9-1 and IS there/ore u)inecessary.
Comment Procedures: Written comments may be submitted to
.\ls. Jan Slusser at Sorth Carolina Department of Revenue.
Motor Fuel Tax Division. PO Box 8'1. Raleigh. \C 2'602.
Comments received will be taken into consideration in adopting
the permanent rule. If you have questions, you may call Ms.
Slusser at 9 19-'33-4629.
CHAPTER 9 - MOTOR FUELS TAX DIMSION
SUBCHAPTER 9K - GASOLINE, DIESEL AND
BLENDS
November 16. 1998 at the SC State Board of CPA Examiners.
1101 Oberlin Road Suite 104. Raleigh. \C 2'605.
Reason for Proposed Action: To amend and adopt language
resulting from the amended Lniform .Accountancy Act. which is
a document that the Board uses as guidance to reflect current
protection of the public and uniform regulation of its licensees.
To amend and repeal rules relevant to reciprocal certification,
firm registration and ownership, professional ethics and
conduct, and definitions, as needed.
Comment Procedures: Any person interested in these Rules
may submit comments by mailing the comments to Robert S.
Brooks. Executive Director .\C State Board of C PA examiners.
POBox 1282'. Raleigh. SC 2' 605.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local government funds. These Rules do not
have a substantial economic impact of at least five million
dollars I S 5. 000. 000) in a 12 -month period.
SUBCHAPTER 8A - DEPARTMENTAL RULES
SECTION .0300 - DEFLNITIONS
SECTION .0600 - ENFORCEMENT AND
ADMINISTRATION
.0601 RECORDS OF EXEMPT SALES
To e nabl e th e D e partm e nt of R e \ e nu e to id e ntify th e sal e s
mad e to e x e mpt purchas e rs of motor fu e ls, a lic e n se d
distributor shall pro\id e such information on a quart c rl) basis.
A lic e n se d di s tributor ma\ us e its Quart e rK R e conciling
R e port to pro\ id e th e r e quir e d information.
Authorlt^■G.S 105-251: 105-252: 105-262: 1 05-44961 (ci.
TITLE 21 - OCCUPATIONAL LICENSING BOARDS
CHAPTER 8 - BOARD OF CERTIFIED PUBLIC
ACCOUNTANT EXAMINERS
Notice is hereby given in accordance with G.S. 150B-21.2
that the SC State Board of CPA Examiners intends to
amend rules cited as 21 SC4C 8A .0301. .0308. .0310. .0315:
8F.010~. .0504: 8H .0001. .0002: 81.0004: 8J .000' - .0008.
.0010 - .0011: 8K .0104 - .0105: 8M .0102 - .0104. .0201 -
.0202. .0204. .0206 - .020~. .0301 - .0306. .0401 - .0403: 8S
.0202. .0208. .0302 -.0303. .0306 -.030': and repeal rule cited
as 21 SCAC 8J .0002. Sotice of Rule-making Proceedings Mas
published in the Register on August 3. 1998.
Proposed Effective Date: April 1. 1999
A Public Hearing will be conducted at 10:00 a.m. on
.0301 DEFINITIONS
(a| The definitions set out in G.S. 93-l(a) shall appl> when
those defined terms are used in 2 1 NCAC 8.
(b) In addition to the definitions set out in GS 93- Ua). the
following definitions and other definitions in this Section apph
when these terms are used in 2 1 NCAC 8:
( 1 ) "Acti\ e." w hen used to refer to the status of a person,
describes a person who possesses a North Carolina
certificate of qualification and who has not othen\ise
been granted "Retired." "Inacti\e." or "Conditional"
status;
(2) ".Agreed upon procedure" means a client has engaged
a CRA to issue a report of findings based on specific
procedures performed on specific subject matter of
specified elements, accounts, or accounting
information that is part of but significantK less than a
financial statement:
(3) "AICPA" means the .American Institute of Certified
Public .Accountants:
(4) "Applicant" means a person who has applied to take
the CRA examination;
(5) ".Attest ser\ ice" means:
(A) an_\ audit.
(B) an\ review of a financial statement.
(C) an> compilation of a financial statement when
the CPA expects, or reasonabK might expect,
that a third part} will use the compilation and
the CRA does not disclose a lack of
independence, and
(D) an\ examination of prospective financial
information; information, and
(E) an\ agreed upon procedure.
696
XORTH CAROLI\A REGISTER
October 15. 1998
13:8
PROPOSED RULES
(6)
(7)
(8)
(9)
(10)
"Audit" means an examination of tlnanciai statements
of a person b> a CPA. conducted in accordance with
generally accepted auditing standards, to determine
whether, in the CPA's opinion, the statements
conform with generall> accepted accounting
principles or, if applicable, with another
comprehensive basis of accounting;
"Board" means the North Carolina State Board of
Certified Public Accountant Examiners;
"Calendar \ear" means the 12 months beginning
Januar\ 1 and ending December 3 1 ;
"Candidate" means a person whose application to take
the CPA examination has been accepted and who ma\
sit for the CPA examination;
"Client" means ew? a person who oralK or in writing
agrees with a p e r s on or Firm holding out pursuant to
2 1 NCAC A .0308 to r e c e iv e an\ s e rvic e s includ e d in
24 — NCAC — A — .0307; licensee to receive an\
professional services;
(11) "Commission" means compensation, except a referral
fee. for recommending or referring an> product or
service to be supplied by another person;
(12) "Compilation of a financial statement" means
presenting in the form of a financial statement
information that is the representation of an> other
person w ithout the CPA's undertaking to express any
assurance on the statement;
(13) "Conditional." when used to refer to the status of a
person, describes a person who holds a North
Carolina certificate of qualification under certain
conditions as imposed b> the Board, such as
additional requirements for failure to complete the
required CP hours in a calendar >ear;
(14) "Contingent fee" means a fee established for the
performance of an\ service pursuant to an
arrangement in which no fee will be charged unless a
specified finding or result is attained, or in which the
amount of the fee is otherwise dependent upon the
finding or result of such service;
(15) "CPA" means certified public accountant;
(16) "CPA" firm" means a sole proprietorship, a
partnership, a professional corporation, a professional
limited liability companv. or a registered limited
liabilitN partnership which uses "certified public
accountant(s)" or "CPA(s)" in or with its name or
offers to or renders an\ attest services in the public
practice of accountancv;
(4-64 (17) "CP" means continuing professional education;
fl-74 ( 18) "Disciplinar\ action" means revocation or suspension
of. or refusal to grant, membership, or the imposition
of a reprimand, probation, constructive comment, or
any other penalty or condition;
(4-8) "Disc l osur e " means a writt e n stat e m e nt of th e s e rvic e
to b e r e nd e r e d with the conting e nt f ee to b e charg e d
and which is dat e d and sign e d b> th e cli e nt;
(19) "Examination of prospective financial information"
means an evaluation b\ a CPA of;
(A) a forecast or projection,
(B) the support underlying the assumptions in the
forecast or projection.
(C) whether the presentation of the forecast or
projection is in conformity with AICPA
presentation guidelines, and
(D) whether the assumptions in the forecast or
projection provide a reasonable basis for the
forecast or projection;
(20) "FASB" means the Financial Accounting Standards
Board;
(244 "Firm" m e an s an individual propri e tor, a partn e rship,
a prof e ssional corporation, a prof e ssional limit e d
liabil i tv company, or a r e gist e red limited liability
partner s hip;
(J24 (2I) "Forecast" means prospective financial statements that
present, to the best of the responsible party's
knowledge and belief, an entit\'s expected financial
position, results of operations, and changes in
financial position or cash flow s that are based on the
responsible party's assumptions reflecting conditions
it expects to exist and the course of action it expects
to take;
fjj4 (22) "GAS" means the Governmental Accounting
Standards Board;
(J4-) (23) "Inactive," when used to refer to the status of a
person, describes one who has requested inactive
status and been approved by the Board and who does
not use the title "certified public accountant" nor does
he or she allow anyone to refer to him or her as a
"certified public accountant," and neither he or she
nor anyone else refers to him or her in any
representation as described in 21 NCAC A .0308(b);
(^^ (24) "IRS" means the Internal Revenue Service;
(25) "Jurisdiction" means an\ state or territop. of the
United States or the District of Columbia;
(26) "License year" means the 12 months beginning JuK 1
and ending June 30;
(27) "Member of a CPA firm" means any CPA who has an
equity ownership interest in a CPA firm including
own e rs, partn e rs and shar e hold e rs; firm;
(28) "NASA" means the National Association of State
Boards of Accountancv;
(29) "NCACPA" means the North Carolina Association of
Certified Public Accountants;
(30) "North Carolina office" means an> office physically
located in North Carolina;
(31) "Participating CPA firm" means a CPA firm
participating in the SQR program. It does not include
CPA finns exempt b\ reason of 21 NCAC 8M
.0102(a) or deemed in compliance pursuant to
21 NCAC8IV1 .0104;
(32) "Person" means any natural person, corporation,
partnership, professional limited liability company,
registered limited liabilits partnership, unincorporated
association, or other entity;
(33) "Professional" means arising out of or related to the
13:8
NORTH CAROLINA REGISTER
October 15, 1998
697
PROPOSED RULES
particular knou ledge or skills associated with CPAs:
<4») (34) "Projection" means prospective financial statements
that present, to the best of the responsible party's
knowledge and belief. gi\en one or more h\pothetical
assumptions, an entity's expected financial position,
results of operations, and changes in financial position
or cash tlous that are based on the responsible part\ 's
assumptions reflecting conditions it expects would
exist and the course of action it expects would be
taken gi\en such hypothetical assumptions;
f4-l-> ( 3 5 ) "Referral fee" means compensation for recommending
or referring an_\ ser\ ice of a CPA to an_\ person;
<4» H36) "Retired." when used to refer to the status of a person,
describes one possessing a North Carolina cenificate
of qualification who \erifies to the Board that the
applicant does not receive or intend to receive in the
future anv earned compensation for current personal
services in anv job whatsoever and will not return to
active status. However, retired status does not
preclude volunteer serv ices for which the retired CPA
receiv es no direct nor indirect compensation so long
as the retired CPA does not sign anv documents,
related to such serv ices, as a CPA;
<46 4(37) "Revenue Department" means the North Carolina
Department of Revenue;
<47-> (38) "Review " means to perform an inquirv and analvtical
procedures that permit a CPA to determine v\hether
there is a reasonable basis for expressing limited
assurance that there are no material modifications that
should be made to financial statements in order for
them to be in conformitv with generallv accepted
accounting principles or. if applicable, with another
comprehensive basis of accounting:
"SQR Advisor} Committee" means the State Qualit}
Rev lew Adv isop. Committee to the Board;
40) "SQR Program" means the State Qualitv Review
Program of the North Carolina State Board of
Certified Public .Accountant Examiners;
"SQR Review team" means that team of CPAs which
reviews a CPA firm pursuant to the requirements of
Subchapter 8M. A review team mav be comprised of
one or more members;
"SQR Review team captain" means that member of a
rev lew team v\ ho is responsible for the rev iev\ and
supervises the other members of the team;
"SQR Reviev\er" means a member of a review team
including the review team captain;
"Suspension" means a revocation for a specified
period of time. A CPA mav be reinstated after a
specific period of time if the C?.\ has met all
conditions imposed bv the Board at the time of
suspension: and
f4-4 4(45) "Trade name" means a name used to designate a
business enterprise.
AuthurinG.S. 93-1: 93-1 2(8c).
»-m(41)
(444(42)
f434(43)
f4»>(44)
.0308 HOLDING OUT TO THE PL BLIC
(a) The phrase "holds himself out to the public as a certified
public accountant." as used in defining "public practice of
accountancy" in G.S. 93- 1(a)(5) and in these Rules, means any
representation that a person holds a certificate of qualification,
if that representation is made in connection with an offer to
perform or the performance of accountancv serv ices for the
public, regardless of whether that representation is made hv the
person, someone associated w ith that person, or someone serv ing
as that person's agent. Anv such representation is presumed to
invite the public to relv upon the professional skills implied bv
the certificate in connection w ith the professional serv ices
offered to be performed or performed b> the person.
(b) For purposes of this Rule, a representation shall be
deemed to include anv oral or w ritten communication indicating
that the person holds a certificate, including w ithout limitation
the use of titles or legends on letterheads, reports, business
cards, brochures, resumes, office signs, telephone directories or
anv other advertisements, news articles, publications, listings,
tax return signatures, signatures on experience or character
affidavits for exam or certificate applicants, displaved
membership in CPA associations, displaved CP.4 licenses from
this or anv other state, and displaved certificates or licenses from
other organizations vshich have the designation "CPA" or
"Certified Public Accountant" bv the licensee's name.
fe-) Faculty members lic e n se d bv th e Board are not consid e r e d
to b e in th e public practic e of accountancv wh e n th e > us e th e
titl e "c e rtifi e d public accountant" onlv for id e ntification as
faculty m e mbers in an e ducational institution, for purpos e s of
functioning in th e capacirv as s uch facultv memb e rs.
{4) .Authors licens e d bv th e Board ar e not consid e r e d to b e in
the public practic e of accountancv when th e v us e th e title
"c e rtifi e d public accountant" only for id e ntification as authors of
books. — articl e s or oth e r publications, provid e d that such
publications do not offer the p e rformanc e of s e rv ices or th e sal e
of products (oth e r than books, articl e s or other publications) of
anv kind.
fe) Licensees arc not consider e d to be in th e public practic e
of accountancv wh e n th e ir lic e nsur e is publish e d in licensee or
socierv m e mb e rship directories, or is includ e d in th e sal e of
mailing lab e ls, or wh e n licensure or membership status is
confirm e d.
«-f) L ' S e of th e titl e in th e form of a disclosur e , wh e n a licens ee
is r e quir e d b> law to disclos e th e fact of c e rtification as a CPA.
is not "holding out" for th e purpos e s of this Rule.
Aiuhorin- GS 93-liai(5i: 93-12.
.0310 DIRECT SLPER\ ISION DEFINED
(-a-) " Direct supervision" "Sup e rvision" means:
( 1 ) hav ing jurisdiction and oversight authority ov er the
process of planning, coordinating, guiding, inspecting,
controlling, and ev aluating on a continuing basis the
activities and accomplishments of the emplovees
under one's command:
(2) having the power of direction and decision in
implementing activ ities to meet the objectiv es of one's
698
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October 15, 1998
13:8
PROPOSED RULES
»
stewardship; aftd
(3) having authority delegated by higher management to
hire, transfer, suspend, recall, promote, assign, or
discharge an employee under one's charge or to
recommend such action through the proper
administrative chain of command, command;
(4) haxina authority to super\ise the emplo\ee in the
usual line of authorit\ unrestricted by multiple
positions of influence; and
(5) having authorit\ to verifN the emploNee's experience
in a notarized experience affidavit.
fb) "Direct sup e rvision" m e ans that the person sup e rvis e d i s
reporting to th e sup e rvisor and th e r e is a cl e arcut personal
conn e ction b e tw ee n e mplo\ ee and sup e rvisor charact e riz e d by
a dir e ct, first hand association unr e strict e d b\ an int e rv e ning
position of influ e nc e .
Authority G.S. 93-12(5).
.0315 NEW CPA FIRM, ONGOING CPA FIRM
(a) When the members of a CPA firm elect to divide the CPA
firm such that two or more CPA fimis are created, one CPA t1rm
ma\ be the ongoing CPA firm and the other CPA firms max be
new CPA firms, or all may be new CPA firms. The ongoing
CPA firm, if an>. is the CPA firm the members of which
r e pr e s e nt ov\n more than 50 percent of the ovsnership of the
predecessor CPA firm prior to the division.
(b) When two or more CPA finns merge, the resulting CPA
firm ma\ be an ongoing CPA finn (successor to one of the
predecessor CPA firms) or it ma\ be a new CPA firm. The
resulting CPA firm is an ongoing CPA tlrm if an\ percentage of
ownership greater than 50 percent of one of the predecessor
CPA firms end up owning a percentage of the resulting CPA
firm greater than 50 percent.
(c) For purposes of this Rule, "percentage of ownership"
refers to the percentage of the CPA tlrm owned aggregateK b\
the group of CPA firm members in question. Percentage of
ownership is detennined based upon the number of shares held
b_\ the group if the CPA firm is a professional corporation or a
professional limited liability companv. or. if the CPA firm is a
partnership or registered limited liabilitv partnership, the
percentage of capital owned b> the group.
(d) A change in an entirs's form (for example, incorporation
of what was a partnership) does not create a new CPA firm. A
n e w firm is not cr e at e d b> th e addition of a m e mb e r(s) not
acquiring a p e rc e ntag e of own e rship gr e at e r than 50 p e rc e nt.
N ei th e r is a n e w tlrm cr e at e d b\ th e lo s s of a m e mb e r(s) by
r e tir e m e nt or death, provid e d th e r e maining m e mbers hav e
purchas e d or ar e purchas i ng th e r e tir e d or d e c e as e d m e mb e rs'
own e rship, r e gardl e ss of whether th e r e tir e d or d e c e as e d
member( s ) ov\n e d mor e than 50 p e rc e nt of th e firm.
(e) A new CPA firm ]s not created by the addition of a
member(s) not acquiring a percentage of ownership greater than
50 percent. Neither js a new CPA firm created by the loss of a
member(s) by retirement or death, provided the remaining
members have purchased or are purchasing the retired or
deceased members' ownership, regardless of whether the retired
or deceased member(s) owned more than 50 percent of the CPA
firm.
Authority' a. S. 93-1: 93-12(8c).
SUBCHAPTER 8F - REQUIREMENTS FOR
CERTIFIED PUBLIC ACCOl'NTANT
EXAMINATION AND CERTIFICATi APPLICANTS
SECTION .0100 - GENERAL PROVISIONS
next below in th e usual lin e of authority or is in a staff position .0107
COMMUNICATION OF RESULTS OF
CPA EXAMINATIONS
(a) The Board shall communicate to candidates in writing the
result achieved in each of their examinations. Num e rical grad e s
Grades awarded to candidates shall not be released to third
parties except b\ written consent of the candidate.
(b) In no event shall any information concerning answers of
candidates be given to anyone other than the candidate.
(c) Examination grades shall be mailed on the uniform
national release date agreed to w ith the NASA and the AICPA.
However, candidates may receive their grades personalK at the
offices of the Board on the release date by notifying the
Executive Director in writing not later than five days prior to the
release date.
(d) Information prepared b\ the Board's staff about the results
of the examination and intended for public infonnation shall be
made available no earlier than the dav after the unifom- national
release date.
AuthorityG.S. 93-12(2): 93-12(3).
SECTION .0500 - APPLICATIONS FOR
CERTIFICATES
.0504 CANDIDATES' ACCOUNTANCY LAW
COURSE REQUIREMENT
(a) Within one \ear prior to applying for certification, all
candidates for certification must pass an open book examination
on the North Carolina Accountancy Statutes and Rules,
including the Rules of Professional Ethics and Conduct
contained therein.
(b) In lieu of taking the examination, a candidate may
complete an eight-hour CP course on the subject of the
examination within one year prior to appKing for the CPA
certificate. Such course or examination must meet the
requirements of 21 NCAC 8G .0404(a). This course may count
toward the candidate's annual CP requirement.
(c) A non-resident candidate for a reciprocal application must
comply with Paragraph (a] or (bj of this Rule within 120 days of
receiving his or her CPA certificate or the certificate shall expire
and the individual shall reinstate the certificate pursuant to 21
NCAC 8J .0006.
.AuthohtyG.S. 93-1 2(a).
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699
PROPOSED RILES
SUBCHAPTER 8H - RECIPROCITY
.0001 RECIPROCAL CERTIFICATES
(a) P e rson s who m ee t th e r e quir e m e nts ot'G.S. 03 12(6) may
appl> to th e Board for a r e ciproca l c e r tifi ca te . A person from
another jurisdiction who desires to otter or render professional
services as a CPA to his or her employer or a client \r\ this state
shall meet all the requirements imposed on an applicant under
G.S. 93-12(5) or the requirements ofG.S. 93-12(6).
(b) The fee for a reciprocal ceitificate shall be the maximum
amount allowed b> statute.
(c) .An applicant for a reciprocal certificate shall meet all of
the current requirem e nt s impos e d on an applicant und e r G.S.
Q3 12(5) or th e follouing r e quir e m e nt s, w hich th e B o ard
consid e rs to b e subsluntial l > e quiva le nt to tho se the follouinu
requirements:
( 1 ) The applicant has the unr e strict e d privil e g e legal
authorin to use the CPA title and to practice public
accountancv in any stat e or t e rritorv of th e Unit e d
Stal e s, or th e District of Columbia, a jurisdiction.
(2) The applicant: applicant has received a score of at
least 75 on each part ot' the Uniform CPA
Examination.
{A) within t e n v e ar s immediat e lv pr e c e ding th e
filing date of th e app l ication, has had four
v e ars of e xp e ri e nce in th e fi el d of accounting
und e r th e dir e ct supervisio n o f a CP. - \ who
h e ld a valid licens e during th e p e riod of
sup e rvision in anv stat e or t e n"itor\ of th e
Unit e d Stat e s or th e District o f Co l umbia: or
(-B^ has t e n v e ars of exp e ri e nc e in th e fi e ld of
accounting, or t e n \ e ars of e xp e ri e nc e t e aching
accounting as d e fin e d and calculat e d in 21
NCAC S F .0 109. or anv combination of such
e xp e ri e nc e — e arn e d — within — (iw — ^2 — v e ars
imm e diat e lv pr e c e ding th e filing dat e of th e
application.
(4^ Th e applicant r e c e iv e d a scor e of at l e a s t 75 on e ach
part of th e Uniform CPA Examination .
(-4-) During th e tv\o v e ars preceding th e applicant's filing
dat e for a r e ciprocal c e rtificat e , th e appl i cant ha s
complet e d 80 hours of CP in courses meeting the
r e quir e m e nts of 21 NCAC 8G .0 4 01(a). How e v e r.
applicants who r e c e iv e d th e ir initial CPA licens e
within four vears from th e filing date of their
application for a reciprocal c e rtificat e ar e e x e mpt
from this CP r e quirement.
(d) An applicant for chang e in s tatus, r e issuance, or
r e instat e m e nt of a r e ciprocal c e rtificat e that was inactiv e ,
forf e it e d, or r e tir e d mur e than 10 v e ars b e for e th e dat e of
r e application. shall complv vsith all curr e nt r e quir e m e nt s for a
r e ciprocal certificate, applv ing for a reciprocal certificate under
G.S. 93-12(6) must meet the follov\ing requirements v\hich the
Board considers to be substantiailv equivalent to those of G.S.
93-12(5):
( 1) The applicant shall have 150 semester hours of
college or university education including a bachelors
or higher degree with a concentration ]n accounting
and other courses that the Board may require from a
college or university that is acceptable to the Board
and one year of experience in the field of accounting
verified by a certified public accountant who was the
applicant's direct supervisor: or
(2) The applicant:
(A) within \Q vears immediately preceding the
filing date ot' the application, has had four
vears of experience in tfie field of accounting
under the direct supervision of a CP.A \vho
held a valid license durin g the period of direct
supervision in any state or teiritorv of the
United States or the District ot" Columbia; or
(B) has 10 years of experience in the field of
accounting, or 10 vears of experience teachin g
accounting as detlned and calculated in 21
NCAC 8F .0409. or any combination of such
experience earned within the 12 vears
immediately preceding the filing date of the
application: and
(3) During the two years preceding the applicant's filin g
date for a reciprocal certificate, the applicant has
completed 80 hours of CP in courses meeting the
requirements of 21 NCAC 8G .0401(a). How ever, an
applicant v\ho received his or her initial CPA license
v\ithin four vears from the filing date of the
application for a reciprocal certificate is exempt from
this CP requirement.
(e) An applicant for change in status, reissuance, or
reinstatement of a reciprocal certificate that was inactive,
forfeited, or retired more than 10 vears before the date of
reapplication. must complv v\ith all current requirements for a
reciprocal certificate.
AiilhorinG.S. 93-12/6/: 93-I2(a).
.0002 TEMPORARY PERMIT
(a) The Board may grant temporary permits onlv to applicants
for reciprocal certificates pending their qualification under 21
NCAC 8H .0001. .0001 and application to the Board on forms
prov ided bv the Board.
fb4 An out of stal e CPA \Kho do e s not hav e a c e rtificat e from
this Board but d e sir e s to us e th e CPA title within this stat e must
f+-l apply to the Board for a temporary permit and
reciprocal certificate on forms prov ided bv the Board;
(2^ furnish th e Board with an affidavit sign e d bv an
official of th e CPA lic e nsing board of a stat e in which
th e CPA is ctin e nl l v — l ic e ns e d to practic e public
accounting, show ing both th e c e rtificate numb e r and
that th e applicant i s in good s tanding; and
<4) furnish th e Board v\ith e vid e nc e of th e applicant's
CPA e .xamination grad e s through an affidav it sign e d I
bv an official of a CP.A lic e n s ing board which can
v e rify th e grad e s;
fe)(b} Upon approval of a temporary pemiit. the Board will
700
NORTH CAROLINA REGISTER
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PROPOSED RULES
>
issue the applicant a statement confmning that the CPA is in
good standing in the state issuing the CPA's ceilificate and is
entitled temporariK to use the CPA title and engage in the public
practice of accountancy in North Carolina for a stated period.
The stated period shall expire 120 da>s after issue or upon
issuance of the individual's reciprocal certificate, whichever
comes first.
Authorin-G.S. 93-12(6): 93-1 2(a).
SUBCHAPTER 81 - REVOCATION OF
CERTIFICATES AND OTHER
DISCIPLINARY ACTION
.0004 MODIFICATION OF DISCIPLINE AND
NEW CERTIFICATE
(a) A person or CPA finn that has been disciplined b\ the
Board may appK to the Board for modification of the discipline
at any time after the effective date of the Board's decision
imposing it: however, if any previous application has been made
with respect to the same discipline, no additional application
shall be considered before the lapse of one year following the
Board's decision on that previous application. Provided,
however, that an application to modify permanent revocation
shall not be considered until after five years from the date of the
original discipline, nor more often than three years after the
Board's last decision on any prior application for modification.
(b) The application for modification of discipline or for a new
certificate shall be in writing, shall set out and. as appropriate,
shall demonstrate good cause for the relief sought. The
applicition for an individual shall be accompanied by at least
three supporting recommendations, made under oath, from
CAPS who have personal know ledge of the activities of the
applicant since the discipline was imposed. The application for
a CPA firm shall be accompanied by at least three supporting
recommendations, made under oath, for each CPA partner. CPA
member, or CPA shareholder from CAPS who have personal
know ledge of the activities of the CPA partner. CPA member, or
CPA shareholder since the discipline was imposed.
(c) "Good cause" as used in Paragraph (b) of this Rule means
that the applicant is completely rehabilitated v\ith respect to the
conduct which was the basis of the discipline. Evidence
demonstrating such rehabilitation shall include evidence:
( 1 ) that such person has not engaged in an\ conduct
during the discipline period which, if that person had
been licensed or registered during such period, would
have constituted the basis for discipline pursuant to
G.S. 93-12(9);
(2) that, with respect to an\ criminal conviction which
constituted any part of the previous discipline, the
person has completed the sentence imposed: and
(3) that, with respect to a court order, restitution has been
made to any aggrieved party.
(d) In determining good cause, the Board may consider all the
applicant's activities since the disciplinary penalty was imposed,
the offense for which the applicant was disciplined, the
applicant's activities during the time the applicant was in good
standing with the Board, the applicant's rehabilitative efforts,
restitution to damaged parties in the matter for which the penalty
was imposed, and the applicant's general reputation for truth and
professional probity. For the purpose of this Paragraph,
"applicant" shall, in the case of a CPA firm, include CPA
partners, CPA members, or CPA shareholders.
(e) Any person who applies for a modification of discipline
and for a new certificate after revocation shall, in addition to the
other requirements of this Section, comply with all qualifications
and requirements for initial certification which exist at the time
of the application.
(f) No application for a new certificate or for modification of
discipline shall be considered while the applicant is serving a
sentence for any criminal offense. Serving a sentence includes
incarceration, probation (supervised or unsupervised), parole, or
suspended sentence. an> of which are imposed as a result of
having been convicted or plead to a criminal charge.
(g) An application shall ordinarily be ruled upon by the Board
on the basis of the recommendations and evidence submitted in
support thereof However, the Board may make additional
inquiries of any person or persons, or request additional
evidence it deems appropriate.
(h) As a condition for a new certificate or modification of
discipline, the Board ma\ impose terms and conditions it
considers suitable.
Authority G.S. 55B-12: 93-2: 93-l2(a): 93-12(7b): 93-12(9).
SUBCHAPTER 8J - RENEWALS AND
REGISTRATIONS
l e tters.
.0002 SUPERVISION OF CPA OFFICES
Ev e ry CPA office or tmn which us e s any words
abbr e viations, s ymbols or oth e r means of identification to
indicat e that th e offic e is e ngag e d in th e practic e of public
accountancx shall b e activ e ly and locally s up e rvis e d by a CPA
who se primary r e spon s ibility and a corr e sponding amount of
tim e shall b e work p e rfonn e d in that offic e . No p e rson shall b e
d e signat e d as th e sup e rvisor or manag e r of any such offic e
unl es s h e or sh e is th e hold e r of a North Carolina CPA
certificat e in good standing.
Aiithorit}- G.S. 93-12(a)(5): 93-12(9).
.0007 MAILING ADDRESSES OF CERTIFICATE
HOLDERS AND CPA FIRMS
All certificate holders and CPA firms shall notify the Board
in writing within 30 days of an\ change in address or business
location.
.4lUhont^•G.S. 55B-12: 93-12(:'h)(5): 93-12(9).
.0008 CPA FIRM REGISTRATION
(a) All CPA flmis shall register w ith the Board w ithin 30 days
after opening a North Carolina office or beginning a new CPA
firm unless the\ are a professional corporation, professional
13:8
NORTH CAROLINA REGISTER
October 15, 1998
701
PROPOSED RULES
limited iiabilin compan\. or registered limited liabilit}
partnership, in which case the\ shall register prior to formation
pursuant to 2 1 NCAC 8K .0 1 04 and .030 1 .
(b) In addition to the initial registration required b\ Paragraph
(a) of this Rule, all CP.A firms shall register annual!) b\ .lanuan.
31 \\ith the Board upon forms pro\ided b\ the Board.
(c) The infomiation pros ided b\ the registration shall include:
(1)
C)
(3)
(4)
(5)
(6)
(7)
(8)
Either an application for exemption from SQR- a
request to be deemed in compliance with SQR or
registration for SQR- pursuant to 2 1 NCAC 8M .0102
an'd.0104;
For all CP.A tlmis not exempt from the SQR program.
v\ ith the registration immediateK following its re\ iew.
the affida\it required b\ 21 NCAC 8M .0^1 02(d):
For all North Carolina offices, an office registration
form indicating the name of the office super\ isor. the
location of the office and its telephone number:
For all partnerships or registered limited liabilitx
partnerships, a list of all resident and nonresident
partners of the partnership:
For all professional limited liabilit\ companies, the
information set forth in 21 NCAC 8K .0104(d):
For all incorporated CP.A firms, the information set
forth in 21 NCAC 8K .0104(d);
For all CP.A fimis. the appropriate registration fees as
set forth in 21 NCAC 8J .0010: and
For all new CP.A fimis. the percentage of ownership
held indi\iduall\ b> each partn e r, shar e hold e r, or
m e mb e r: owner:
(A)
(B)
in the new CP.A finn: and
at the \ ear-end in each CP.A firm in which that
partn e r, m e mb e r, or shar e hold e r was a partner-
m e mber, or shar e hold e r owner was an owTier
during the preceding two \ears.
(9) For all changes in ownership of a CP.A firm, the
percentage of ownership held indi\iduall\ b\ each
partn e r, shar e hold e r, or m e mb e r, owner.
(d) .All infomiation pro\ided for registration with the Board
shall pertain to events of and action taken during the >ear
preceding the > ear of registration. The last da\ of the preceding
calendar \ ear is the "\ ear-end".
(e> With regard to Paragraph (c)(3) of this Rule, one
representative of a CP.A fimi ma_\ file all documents with the
Board on behalf of the CP.A firm's offices in North Carolina.
However, responsibilitx for compliance with this Rule shall
remain w ith each office super\ isor.
(fl W ith regard to Paragraph (cH4l or (c)(5 1 of this Rule, one
annual listing b\ a representative of the partnership, registered
limited liability partnership, or professional limited liabilitx
companv shall satisfx the requirement for all partn e rs or
m e mb e rs owners of the CPA firm. How ev er. each partn e r or
m e mb e r owner shall remain responsible for compliance w ith this
Rule. The absence of a filing under Paragraph (c)(4) or (c)(5) of
this Rule shall be construed to mean that no partnership,
registered limited iiabilitx partnership, or professional limited
liabilitv companv exists,
(li) Notice that a CP.A fimi has dissolved or an\ chantze in the
information required b\ Paragraph (c)(3) of this Rule shall be
delivered to the Board's offiice within 30 davs after the change or
dissolution occurs. ,A professional corporation or professional
limited liabiliu companv w.hich js dissolving shall deliver the
■Articles of Dissolution to the Board's office within 30 davs of
filing with the Office of the Secretary of State.
(h) Upon v\ ritten petition bv a CP.A fimi. the Board mav. in
its discretion, grant the CP.A firm a conditional registration for
a period of 60 davs or less, if the CPA firm shows that
circumstances bevond its control prohibited it from registering
v\ith the Board, completing a qualitv review or notit\ing the
Board of change or dissolution pursuant to Paragraphs (a), (b).
(c). and (g) of this Rule. The Board ma> grant a second
extension under continued extenuating circumstances.
(i) .A complete registration, as required b\ 21 NCAC 8.1
.0008(b) and (c). shall be postmarked with proper postage not
later than the last da> of Januan. unless that date falls on a
v\eekend or federal holidav. in which case the registration shall
be postmarked or received in the Board office on the ne.xt
business dav. Onh a U.S. Postal Service cancellation shall be
considered as the postmark. If a registration is sent to the Board
office via a private deliver, service, the date the package is
received bv the deliver}, service shall be considered as the
postmark.
Aiahorin- G.S. 55B-I(J: 55B-12:
93-12tai: 93-I2l8ci.
'C-1: 5'C-
^'-84.2:
.0010 REGISTR.ATION AND SQR FEES
The annual registration fees shall be as follows:
( 1 ) For participation vv ithin SQR or for a request to be
deemed in compliance with SQR. sevent}-five dollars
(S75.00) plus five dollars (S5.00) for each additional
North Carolina office of the CP.A firm not excused
from SQR bv 21 NCAC S.M .0204;
(2) For all professional corporations or professional
limited liabilirv companies. tv\ent\-five dollars
(S25.00); and
(3) For all non-incorporated CPA firms which have
offices both within and outside the state of North
Carolina. v\hether sole proprietorships, partnerships,
or registered limited liabilirv partnerships, an amount
equal to two thousand five hundred dollars
(S2.500.00) or the number of own e rs CP.A members
of the CP.A firm multiplied bv ten dollars (SIO.OO).
vshichever is less.
Authority G.S. 55B-11: 558-12:
93-I2(-h): 93-!2(ai: 93-l2iHci.
5 'C-1: 5'C-2: 59-84.2:
.0011 COMPLIANCE \MTH CPA FIRM AND
SQR REGISTR.ATION
If a CP.A firm fails to compiv with anv part of 21 NCAC 8J
.0008. 8J .0010 or 8M .0102. the Board may take disciplinan.
action against the CP.A firm's members. Such discipline mav
include:
(I) a conditional license upon such conditions as the
702
.\ORTH CAROLINA REGISTER
October 15. 1998
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PROPOSED RULES
Board may deem appropriate for non-compliance of
less than 60 days;
(2) a conditional license and one hundred dollar
($100.00) civil penalty for non-compliance in excess
of 60 days but not more than 1 20 days:
(3) a suspension of each member's CPA certificate for a
period of not less than 30 da\s for non-compliance in
excess of 120 days.
AuihohtyG.S. 55B-I2: 57C-1: 57C-2: 59-84.2; 93-1 2(8c): 93-
12(91.
SUBCHAPTER 8K - PROFESSIONAL
CORPORATIONS AND PROFESSIONAL
LIMITED LIABILITY COMPANIES
SECTION .0100 - GENERAL PROVISIONS
.0104 REGISTRATION AND RENEWAL
(a) Domestic CPA professional corporations or professional
limited liabilit\ companies must be formed and all CPA
professional corporations or professional limited liability
companies must be operated in accordance with the requirements
set out in G.S. 55B and 57C. Before any CPA professional
corporation or professional limited liabilit\ compan\ can offer
to perform or perform any professional services in this state, it
must register with the Board.
(b) Initial registration.
(1) Domestic CPA Corporation or Professional Limited
Liability Company. In order to register initially \s ith
this Board, the incorpoi ators of a domestic CPA
corporation or professional limited liability company,
prior to incorporation of the CPA tlrm. must:
(A) prepare and tile with the Board the articles of
incorporation along with any supporting
documents and appropriate checks for fees
payable to the Secretary of State;
(B) complete and file with the Board the
application for professional corporation or
professional limited liability company
registration form along with an\ supporting
documents: and
(C) pay to the Board an initial registration fee of
fifty dollars ($50,00),
(2) Foreign CPA Corporation or Foreign Limited
Liability Company, To register initially with the
Board, the officers of a foreign corporation or foreign
limited liability compan\. prior to performing services
or offering to perform services in North Carolina,
must submit to the Board:
(A) on an application for registration fonn
provided by the Board, a list of its present
shareholders or members and the state or
territory issuing the CPA certificate, or the
equivalent, of each shareholder or member and
the number of each certificate or equivalent:
and
(B) the documents required by G,S, 55A-61. 55 A-
62. and 57C-7,
(c) In addition to its initial registration, every CPA
corporation or professional limited liability company, whether
domestic or foreign, must register annually pursuant to 21
NCAC 8J ,0008.
(d) The application for registration by a CPA corporation or
professional limited liability company shall provide the
follow ing information:
( 1 ) the name and address of the professional corporation
or professional limited liability company:
(2) the address of each office operated or maintained by
the corporation or professional limited liability
company;
(3) the names and addresses of all the officers, directors,
shareholders, or members: and
(4) the names and addresses of all the employees and
managers of the corporation or professional limited
liabilit\ compan\ licensed b\ the Board under the
provisions of G.S. 93.
.iuthohtyG.S. 55B-I1: 5'C-l; 57C-2:59-84.2: 93-8: 93-12(7h):
93-1 2 (8cj.
.0105 SUPPLEMENTAL REPORTS
(a) The Board ma\ request in writing such supplemental
reports as it deems appropriate from any professional
corporations or professional limited liability companies
registered v\ith the Board pursuant to G.S. 55B. 57C. and these
Rules. The professional corporation or professional limited
liability company shall file such reports with the Board's office
within 30 days from the date it received the request.
(b) In addition to the supplemental reports required by 21
NCAC 8.1 .0008(g). professional corporations or professional
limited liabilitv companies registered with the Board pursuant to
G.S. 55B and 57C shall file a certified copy of all amendments
to the articles of incorporation or articles of organization within
30 days aft e r prior to the effective date of each amendment.
They shall also file a copy of any amendment to the by-laws,
certified to be a true copy by the Secretary or an assistant
secretary of the corporation or professional limited liabilit)
company, within 30 days aft e r prior to adoption of the
amendment.
.Authority G.S. 558-1!: 5''C-!: 57C-2: 93-12(3).
SUBCHAPTER 8M - STATE QUALITY REVIEW
PROGRAM
SECTION .0100 - GENERAL SQR REQUIREMENTS
.0102 REGISTRATION REQUIREMENTS
(a) A CPA firm which has not performed any audits, reviews,
compilations, or agreed upon procedures during the 12 months
prior to the \ear-end of the registration required by 21 NCAC 8J
.0008(a) and (b) shall be exempt from the SQR program for the
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703
PROPOSED RULES
12 months follow ing the > ear-end but not from registering with
the Board.
(b) Unless exempt under Paragraph (a) of this Rule, each
ongoing CPA firm shall complete an SQR within 24 months
following the \ear-end of each registration unless it has
completed an SQR w ithin 24 months prior to the \ear-end.
(c) Unless exempt under Paragraph (a) of this Rule, a new
CPA tlnn shall complete its initial SQR within 24 months of the
date of its initial registration pursuant to 21 NCAC 8J .0008(a).
(d) Ever} CPA firm not exempt from SQR by Paragraph (a)
of this Rule, after completion of a qualit\ review, shall procure
a statement signed b\ the re\ iew team captain, a statement
signed by a member of the CPA firm being re\ iewed, or letter of
acceptance from an approved review program, stating that the
C?.\ firm has completed an SQR or one of the review programs
listed or referred to in 2 1 NCAC 8IVI .0104. The CPA fnm shall
submit the statement or documentation with the annual
registration following the review as set forth in 21 NCAC 8J
.0008(c)(2).
(e) For purposes of this Rule, an SQR is complete when the
review team has delivered its report required b\ 21 NCAC 8M
.0306 to the reviewed CPA firm. Any quality review other than
SQR is complete when the review team has delivered its final
report to the reviewed CPA firm. If mailed, a report shall be
deemed delivered when postmarked.
AiithoriiyG.S. 93-I2('b): 9S-i:(Hc).
.0103 PROHIBITION OF ABUSE
Firms CPA firms shall not rearrange their structure or act in
an\ other manner w ith the intent to avoid participation in SQR.
AiiihoriryG.S. 93- 1 2 (8c).
.0104 FIRIV1S DEEMED IN COMPLIANCE
(a) Firms CPA fimis which have participated in one of the
review programs set forth in either Paragraph (b) of this Rule or
the list referred to in Paragraph (c) of this Rule, rather than SQR.
within the applicable time period prescribed by 21 NCAC 8M
.0102(b) and (c) are deemed to be in compliance with the SQR
program.
(b) The following quality review programs are found by the
Board to be of the t\pe required bv the Board in its SQR
program:
(1) AlCPA Division for CPA Finns SEC Practice
Section, and
(2) AICPA Peer Review Program.
(c) Other quality review programs may be of the type required
b> the Board in its SQR program, which is equivalent to the
guidelines of the AICPA Peer Review Program. A list of such
programs w ill be maintained at the Board offices and mailed to
any CPA firm upon request.
(d) Pursuant to G.S. 93-12(8c), a CPA firm which
contemplates undergoing a quality review program other than the
SQR program or those listed or referred to in Paragraphs (b) and
(c) of this Rule ma\ request a determination from the Board
whether the qualirv rev iew program is of the t\pe required b\ the
Board in the SQR program, which is equivalent to the guidelines
of the AICPA Peer Review Program. The CPA firm shall
supply all infonnation requested of it by the Board and. within
two months of the month all infonnation requested has been
received b\ the Board, the Board shall make its detennination
and notify the CPA firm.
Aulhorin- G.S. 93-I2(Mc)(e).
SECTION .0200
DUTIES OF THE REVIEWED
FIRM
.0201
SELECTION OF ENGAGEMENTS TO BE
REVIEWED
(a) Each office of the reviewed CPA firm not excused under
21 NCAC 8M .0204 shall select a set of engagements to be
submitted for review as required b\ the programs listed in 21
NCAC8M .0104(b)(1) and (2).
(b) A set of engagements for review shall include the
accountant's report and financial statements for one audit, one
review, one compilation, and one agreed upon procedure, if
these levels of service have been performed by the office within
the 1 2 months preceding the \ ear-end. If one or more levels of
service have not been performed, the office shall select reports
of the next highest level of service for renorts required to be
submitted. If of the levels of service, on. compilations have
been performed by the office, the set of engagements shall
include at least one compilation report on a complete set of ■
financial statements which includes disclosures and one
compilation report on a financial statement where management
has elected to omit substantialK all of the disclosures nonnally
required bv generallv accepted accounting principles set forth in
21 NCAC 8N .0209. if both types of compilations are
performed.
(c) The set of engagements, if possible, shall include clients
operating in different industries. For example, submission of
one governmental audit, one manufacturing review and one
contractor compilation would satisfy this requirement.
(d) If a CPA finn to be reviewed does a governmental audit,
at least one shall be included in the set of engagements.
(e) An office of the reviewed CPA firm not participating in
the programs listed in 21 NCAC 8IV1 .0104(b)(1) and (2) shall
select a set of engagements to be submitted for review as
required b> the applicable AICPA Peer Review Program.
AulhorityG.S. 93-1 2<Hc).
.0202 NOTICE TO CLIENTS
The participating CPA firm ma\ adv ise its clients that it w ill
participate in a quality review required bv the Board and that the
client's accounting or auditing work mav be part of the review
process.
Aiahi>nty G.S. 93-!2/8c).
.0204 CERTAIN OFFICES EXCUSED
The following offices of participating CPA firms are not
704
NORTH CAROLINA REGISTER
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required to participate in the SQR program:
(1) offices which are not North Carolina offices, and
which have not performed an> audits, reviews.
compilations, or agreed upon procedures for clients in
North Carolina; and
(2) North Carolina offices which have not performed any
audits, reviews, compilations, or agreed upon
procedures for the 12 months prior to the year-end set
forth in 21 NCAC 8J .0008.
AiithorinG.S. 93-1 2l8c).
.0206 SELECTIONOF A REVIEW TEAM
(a) A participating CPA fimi shall select the review team
which will perform the CPA firm's SQR.
(b) The participating CPA finn shall see that the re\ iew team
is qualified under 2 1 NCAC 8M .030 1 and engaged to perform
the review in accordance with the standards for the performance
of SQR set forth in 21 NCAC 8M .0302-.0306.
Aiilhorin- C.S. 93-12(8c).
.0207 DUTY TO RESPOND TO QUESTIONS
(a) The participating CPA t1rm shall respond promptlv to
questions raised during the review process b\ any member of the
review team, whether oral or written.
(b) The participating CPA firm shall respond in writing to
questions raised by the SQR report required b\ 21 NCAC 8IVI
.0306 w ithin 30 days from the date the report is delivered to it.
The letter of response shall be addressed to the SQR Committee
and a cop\ sent to the review team captain.
Aiithorin'G.S. 93-1 2( 8c).
or referred to in 21 NCAC 8M .0104 within the last
three years but which has not received an adverse
report on its most recent quality review;
(3) must be a manager (or the equivalent) within his/her
CPA firm; and
(4) must have da\-to-day involvement in auditing and
accounting procedures which is sufficiently
comprehensive to enable him/her to perfonn and
oversee the SQR with professional expertise.
Authority G.S. 93-12l8c).
.0302 INDEPENDENCE FROM A REVIEWED
CPA FIRM
(a) A revievser shall be independent with respect to the
reviewed CPA firm.
(b) independence is impaired if a reviewer:
( 1 ) performs an SQR of a CPA firm which performed the
most recent quality review of the reviewer's CPA
firm;
(2) performs an SQR of a CPA finn an emplovee or
member of which performed or participated in the
performance of the most recent quality review of the
reviewer's CPA finn; or
(3) has an> direct or indirect financial interest in a
reviewed CPA finn's client and reviews engagements
performed for that client.
(c) Paragraph (b) of this Rule does not include all instances
where a reviewer's independence would be impaired. In
considering whether independence is impaired, the reviewer
shall consider the effect of family and other relationships and the
possible appearance of loss of independence as a result of those
relationships.
SECTION .0300
.0301
REVIEW TEAM: QUALIFICATIONS
AND DUTIES
QUALIFICATIONS OF REVIEWERS AND
TEAM CAPTAINS
(a) A reviewer must be a CPA on active status licensed in an>
state of the United States, be in good standing with the CPA
boards b\ which (s)he is licensed to practice public accounting,
possess current knowledge of the code of professional ethics and
conduct, and possess current know ledge of the accounting and
auditing standards applicable to the engagements to be reviewed
b\ him/her. However. (s)he need not possess knowledge of the
applicable accounting and auditing standards with regard to
every engagement involved in the review, unless (s)he is the onl\
member of a review team.
(b) A reviewer shall not have been disciplined for violation
of 21 NCAC 8N .0202 or .0408 within the five vears preceding
the date the review engagement is entered.
(c) The review team captain:
( 1 ) must have five years' experience or more as a CPA in
the accounting and auditing function;
(2) must be a member or employee of a CPA fimi which
has completed an SQR or other quality review listed
Author it}- G.S. 93-1 2 (8c).
.0303 CONFLICT OF INTEREST
(a) A reviewer shall not have a conflict of interest with
respect to the reviewed CPA firm or the clients whose
engagements are selected for review.
(b) A reviewer shall avoid contacts with the reviewed CPA
firm's clients or personnel that could be asserted to be evidence
of a conflict of interest.
Authority- G.S. 93-1 2(8c).
.0304 PERFORMING THE REVIEW -
REVIEWER'S DUTIES
(a) The objective of the review shall be to determine that the
financial statements and related accountant's report on the audit,
review or compilation engagements submitted for review do not
depart in a material respect from the requirements of
professional standards set forth in 21 NCAC 8N .0209-.0211,
.0304. and .0403-.0406.
(b) The review team shall read the financial statements
submitted b\ the participating CPA firm and the accountant's
audit, review or compilation report thereon.
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705
PROPOSED RULES
(c) The review team must determine whether each of the
accountant's report and financial statements confonn u ith the
applicable professional standards set forth in 21 NCAC 8N
.0209-.02I I. .0304. and .0403-.0406.
(d) Before issuing its SQR report pursuant to 21 NCAC 8M
.0306, the review team ma\ raise questions with the participating
CPA tlrm either orallv or in written form to resolve questions
which come to their attention during a re\ iew.
(e) The review team shall document the work performed
using programs and checklists which prov ide a reasonable basis
for their SQI^ report.
(ft A revie\\ team shall not issue an SQR report, pursuant to
21 NCAC 81V1 ,0306. unless it has complied with the applicable
review standards and requirements.
Aiilhorily U.S. 93-1 2(Sc).
.0305 CONFIDENTIALITY
Information concerning the participating CPA finn or its
clients or personnel that is obtained as a consequence of the
review is confidential and must not be disclosed to anvone not
involved in the SQR process.
Aiilhorily CJ.S. 9 3- 1 2 (8c >.
.0306 REPORTING REQUIREMENTS
(a) The review team shall deliver an SQR report and the
statement required b\ 2 1 NCAC 8M .0 1 02(d) to the participating
CPA finn v\ithin 60 days after all of the engagements v\hich are
to be reviewed have been delivered to it. Beginning Januarv' I .
19')6. the review team shall also deliver its SQR report to the
SQR Advisorv Committee bv the same date.
(b) The SQR report and a letter of comment, if an\. shall be
written and issued on the letterhead of the team captain's CPA
firm and shall either be unmodified, modified, or adverse.
(c) It is suggested that a letter of comment be issued if the
report is modified or adverse. A letter of comment, if issued,
shall provide reasonablv detailed recommendations for remedial,
corrective actions by the participating CPA firm so that the SQR
Committee can evaluate whether the CPA firm's response to
significant deficiencies noted in the review is a positive one,
consistent with the objectives of the SQR program, and whether
the actions taken or planned b\ the participating CPA firm
appear appropriate in the circumstances.
(d) The SQR report shall describe the limited scope of the
re\ iew and shall not express an opinion or an\ form of assurance
about the re\iewed CPA firm's quality control policies and
procedures for its accounting practice, it shall state whether
anvthing came to the attention of the review team which caused
them to believe that anv of the engagements submitted for
review did not confonn with the requirements of professional
standards in all material respects and. if applicable, describe the
general nature of significant departures from those standards.
(e) An unmodified report includes the review team's
conclusion that nothing came to its attention that caused its
members to believe that the engagements submitted for rev iew
did not conform w ith the requirements of professional standards
in all material respects.
(f) A modified report includes the review team's conclusion
that nothing came to its attention that caused its members to
believe that the engagements submitted for review did not
conform with the requirements of professional standards in all
material respects with the exception of certain reservations
which are noted in the report.
(g) An adverse report includes the review team's conclusion
that the participating CPA firm did not have reasonable
assurance of confonning with professional standards in the
conduct of its accounting practice during the year under review.
Aiilhorily G.S. 93-12(80.
SECTION .0400 - SQR ADVISORY COMMITTEE
.0401 SQR ADVISORY COMMITTEE -
MEMBERS AND DUTIES
(a) The SQR Advisory Committee shall consist of six CAPS
appointed b\ the Board and one Board member appointed b\' the
Board's President.
(b) The SQR Committee shall:
( 1 ) beginning January I, 1996, review all modified and
adverse SQR reports and letters of comments, if anv.
submitted bv review team captains under the SQR
program;
(2) consider all objections filed pursuant to 21 NCAC 8M
.0402(a); and
(3) make recommendations to the Board consistent with
these Rules concerning each of Subparagraphs (b)( I )
and (2)of this Rule.
(c) Prior to making anv recommendations to the Board, the
Committee shall give notice of its proposed recommendation to
the CPA firm to which the recommendation pertains.
(d) The Committee shall also recommend remedial action to
participating CPA firms receiving modified or adverse reports
which, if followed, could increase the participating CPA fimi's
ability to perfomi quality services in the public practice of
accounting.
(e) The Committee shall report at least annually to the Board
on its activities and, further, at any time the Board requests a
special report.
AiilhorinG.S. 93-12(2): 93-1 2(8c).
.0402 OBJECTIONS TO SQR ADVISORY
COMMITTEE
(a) A participating CPA firm may file an objection with the
SQR Advisor. Committee \s ith regard to an SQR report within
30 da\s from the date the report is delivered pursuant to 21
NCAC 8M .0306(a). In any other matter before the Committee,
a CPA tlrm to which a proposed recommendation pertains mav'
file an objection w ithin 30 da>s from notice of the Committee's
recommendation.
(b) All objections shall be in writing and shall be addressed
to the Committee at the Board's address set forth in 21 NCAC
8 A .0102. Objections are filed when received b\ the Board.
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NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
(c) An objection concerning an SQR report shall contain:
(1)
(2)
(3)
(4)
(5)
the name of the reviewed CPA firm;
the name of the review team captain;
the date the review was completed;
the conclusions made in the report to which the
participating CPA firm objects; and
in sufficient detail, the participating CPA tlrm's
reasons for objecting to the report's conclusions,
(d) Objections to proposed recommendations of the
Committee shall identify the proposed recommendation and shall
state the CPA firm's reasons for disagreeing with the
Committee's proposed recommendation in sufficient detail.
AiithonnG.S. 93-12(2): 93-12iHc}.
.0403 REVIEW OF PROTEST
(a) Within 60 da>s of recei\ing an objection from a CPA
firm, the SQR Advisor*' Committee shall render its
determination in response to the objection. It ma>. in its
discretion, propose to recommend to the Board that the SQR
report be amended or alter the recommendation it has proposed
to make to the Board.
(b) During its review of an\ matter raised b_\ an objection, the
SQR Advisor}' Committee may gather infomiation (including
an\ review team's work papers, checklists, and all other
information submitted to a review team b\ a participating CPA
finn)and conduct inter\iews. including interxiews of members
of a review team or the objecting CPA firm.
(c) If the CPA firm and the Committee ar. unable to resoKe
the matter informalK. the Committee shall submit its
recommendation to the Board with notice to the objecting CPA
firm. The objecting CPA firm then has 30 da\ s from such notice
to object to such recommendation b\ filing an objection w ith the
Board. The objection shall comply with the requirements of 21
NCAC 8IVI .0402(d) and is filed when received b> the Board.
(d) The Board shall review the recommendation of the
Committee and the objection and then, if the matter is not
resoKed informall\. the Board or the CPA firm max set the
matter for hearing pursuant to Article 3A of G.S. Chapter 1 50B.
AiiihorinG.S. 93-12(2): 93-12(8c): 150B-2(2): 150B-41(c).
SUBCHAPTER 8N - PROFESSIONAL ETHICS AND
CONDUCT
Section includes but is not limited to deception in:
( 1 ) obtaining or maintaining employment;
(2) obtaining or keeping clients;
(3) obtaining or maintaining certification, retired status,
or exemption from SQR;
(4) reporting CP credits;
(5) certifying the character or experience of exam or
certificate applicants;
(6) impKing abilities not supported b> \alid education,
professional attainments, or licensing recognition;
(7) asserting that services or products sold in connection
with use of the CPA title are of a particular quality or
standard w hen they are not;
(8) creating false or unjustified expectations of favorable
results;
(9) using or permitting another to use the CPA title in or
with a fonn of business not permitted b\ the
accountancy laws or rules;
(10) pemiitting a p e rson or firm an\ one not certified in this
state (including one licensed in another state) to
unlaw fulK use the CPA title in this s tat e ; or state or to
unlaw fully operate as a CPA tlrm in this state; or
(11) falsifying a rexiew. report, or any required program or
checklist of any quality reviexv program.
Aiithorin-G.S. 55B-12: 5'C-2-01: 93-12(9).
.0208 REPORTING CONVICTIONS, JUDGMENTS,
AND DISCIPLINARY ACTIONS
(a) Criminal Actions. A CPA shall notify the Board xvithin
30 days of anx conxiction or finding of guilt of or pleading of
nolo contendere to:
(1)
(2)
SECTION .0200
RULES APPLICABLE TO ALL
CPAs
a felony ; or
any crime an essential element of which is dishonesty,
deceit, fi^aud. a xiolation of federal or state tax laxv. or
a violation of the rules of Professional Ethics and
Conduct contained in this Subchapter.
(b) Civil Actions. A CPA shall notify the Board within 30
dax's of any judgment or settlement in a civil suit, bankruptcx
action, administrative proceeding, or binding arbitration, the
basis of xxhich is grounded upon an allegation of gross
negligence, dishonesty. fi"aud. misrepresentation, incomp e t e ncy.
incompetence, or violation of anx federal or state tax laxx and
xvhich was brought against either the CPA or a North Carolina
office of a CPA firm of x\hich the CPA was a managing partner
Authorin-G.S. 55B-12: 5-C-2-01: 93-12(9).
.0202 DECEPTIVE CONDUCT PROHIBITED
(a) Deception Defined. A CPA shall not engage in deceptive
conduct. Deception includes fraud or misrepresentation and
representations or omissions xvhich a CPA either knox\s or
should know have a capacity or tendency to deceix e. Deceptive
conduct is prohibited xvhether or not anxone has been actually
deceixed. Deception includes not onlx deceptive statements but
also includes the knoxving failure to disclose material facts.
(b) Prohibited Deception. Prohibited conduct unde"- this
SECTION .0300 - RULES APPLICABLE TO ALL CAPS
WHO USE THE CPA TITLE IN OFFERING OR
RENDERING PRODUCTS OR SERVICES TO
CLIENTS
.0302 FORMS OF PRACTICE
(a) Authorized Fomis of Practice. A CPA shall not dir e ctly
or i ndir e ctlx offer or render accounting s e rvic es (including tax
and manag e m e nt advisorx' s e rv i c e s) who uses CPA in or x\ ith the
13:8
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707
PROPOSED RULES
name of the business or offers or renders attest services in the
public practice of accountanc\ to clients shall do so onl\ te
cli e nt s — e xc e pt through a duK authorized CPA sole
proprietorship, partn e rship — ef — CAPS, partnership. CP.A
Professional Corporation. Professional Limited Liabilit\
Compan_\. or Registered Limited Liabilitx Partnership.
(b) Authorized Partn e rs. Ownership. A CPA s hall not e ngag e
in th e public practice of accountancy with a partn e r w ho i s
an\on e oth e r than the hold e r of an unr e xoUed and curr e ntl> \alid
CPA certificat e . A CPA firm, with the exception of Professional
Corporations oraanized under G.S. 5.^B or Professional Limited
Liabilit\ Companies organized under G.S. 57C. shall compK
with the respective ownership requirements of those laws and
ma\ ha\e a minorirs ownership of up to 49 percent owned b\
non-CP.-\ emplo\ees. A CPA tlrm shall ha\e maiorit\
ownership of at least 51 percent and be controlled in Jaw and
fact In holders of \alid CP.A certificates who ha\e the
unrestricted pri\ilege to use the CPA title and to practice public
accountancN in a jurisdiction and at least one whom shall be
licensed bv this Board.
fe4 Ancillar> Practic e . .A CPA may. through anoth e r lawful
form of prof es sional practi ce , o ffer or r e nd e r such non attest
accounting se rx ic es a s ar e ancillar> to anoth e r l e arned prof e ssion
r e gulat e d b > a statutoriK authoriz e d lic e nsing board in thi ' - '.-tate:
fu rth e r pro\ id e d. th e CPA i s lic e n se d h\ th e r e sp e ctix e lic e n s ing
board and off e rs or r e nders thos e s e r\ ic e s through a busin e ss
form authoriz e d b> th e r e sp e ctix e licen s ing board and do e s not
ho l d out th e non CPA finn as a CPA firm. t\n\ such CPf\ must
> e rth e l e ss — r e gist e r — for SQR — as — an — e x e mpt — indixidi
ftevt
K — as — an — e x e mpt — mdnidual
practition e r.
fd4(c) CP.A Firm Registration Required. A CPA shall not
e ngag e in th e public practic e of accountancv offer or render
professional services through a CP.A tlrm which is in violation
of the registration requirements of 21 NCAC 8J .0008. 8J .0010.
or th e SQR r e quir e ments of 21 NCAC 8 VI .0102.
fe)(d) Super\ision of CPA Offic e s. Firms. Ever\ CPA office
Of CP.A tlmi and each registered office in North Carolina shall
be acti\el\ and localK super\ised b\ a designated actix e h
lic e n se d North Carolina CPA currentK licensed by this Board
whose priman. responsibility and a corresponding amount of
time shall be work perfonned in that office.
(e) CP.A Firm Requirements for Non-CPA Ownership. A
CPA firm and its managini; CP.A partner shall be held
accountable for the following [n regard to a non-CP.A owner:
( I ) a non-CPA owner shall be a natural person:
a non-CP.A owner shall be acti\el\ engaged in
Li]
iiJ
pro\ iding ser\ ices to the CP.A t1nn or its clients as his
or her principal occupation:
a non-CPA owner shall compK with al] applicable
accountancN statutes and the administrati\e code:
a non-CPA owner shall be of good moral character
and shall be dismissed and disqualified from
ownership for any conduct that, if committed by a
licensee, would result in a discipline pursuant to G.S.
93-12(9):
a non-CP.A owner shall report his or her name, home
address, home phone number, social securit^ number.
and percentage of ownership of the CPA firm on the
CP.A firm's registration:
(6) a non-CPA owner's liabilit^ in a registered limited
liability partnership: and
(7) a non-CPA owner's name ma\ not be used in or with
the name of tlie CPA firm or iield out to clients or the
public that the non-CPA owner is a CPA.
Auihorin-C.S. 558-12: 5'C-2-0l: 93-1 2i9i.
.0303 OBJECTIN ITV AND CONFLICTS OF
INTEREST
(a) Personal Financial Interest in Ad\ice. When offering or
rendering accounting or related financial, tax. or management
ad\ ice. a CP.A shall be objective and shall not place the CPA's
own financial interests nor the financial interests of a third party
ahead of the legitimate financial interests of the CPA's client or
the public in an\ context in which a client or the public can
reasonabK expect objectivity from one using the CPA title.
(b) Expectation of Objectivity Presumed. If the CP.A uses the
CPA title in an\ wa) to obtain or maintain a client relationship,
the Board will presume the reasonable expectation of objecti\ it>.
(c) Acceptance of a Commission or Referral Fee. A CPA
shall not pay be prohibited from paying a commission to obtain
a client, nor acc e pt ''" rom accepting a commission for a referral
to a client, of produc or sen ices of oth e rs, others except when
the CP.A or CP.A firm also performs attest ser\ ices, during the
period of the attest services engagement and the period covered
by any historical statements invoKed in such attest services.
This Rul e shall not prohibit payments tor th e purchas e of an
accounting practic e , r e tir e m e nt paym e nts to individual s form e rly
e ngag e d in th e practice of public accounting, or paym e nts to
heirs or estat e s.
(d) Acceptance of a Contingent Fee.
( 1 ) The offering or rendering of professional serv ices for.
or the receipt of. a disclos e d contingent fee bv a CPA
is not prohibited except for engaging to render or
rendering bv a CP.A for a contingent fee:
(A) of professional serv ices for. or the receipt of
such a fee from, any person for w hom the CPA
also performs attest serv ices, during the period
of the attest services engagement and the
period covered bv anv historical financial
statements involved in such attest services; and
(B) for the preparation of original or amended tax
returns or claims for tax refunds.
(2) Fees are not regarded as being contingent if fixed bv
courts or other public authorities or. in tax matters, if
determined based on the results of judicial
proceedings or the findings of gov e rnm e ntal ag e nci e s
formally adopted findings that are binding upon the
governmental agencies that make the findings.
(e) For tfie purposes of thus Rule, a CP.A shall provide
disclosure to a client in accepting a commission, referral, or
contingent fee. A CP.A shall provide disclosure in a written
statement of tJie service or product to be rendered or referted
with the contingent fee, commission, or referral fee to be
708
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
charged or received. The written statement shall be dated:
signed b\ the CPA and client in advance of any sale, referral, or
service provided; and a copy given to the client.
Aiithorin- G.S. 55B-12: 5X^-2-01: 93-12(9).
.0306 ADVERTISING OR OTHER FORMS OF
SOLICITATION
(a) Deceptive Advertising. A CPA shall not seek to obtain
clients b\ advertising or using other forms of solicitation in a
manner that is deceptive.
(b) Specialt> Designations. A CPA ma> ad\ertise the nature
of ser\'ices provided to clients but the CPA shall not advertise or
indicate a specialt\ designation or other title unless the CPA has
met the requirements of the granting organization for the
separate title or specialt\ designation and the indi\idual is
cuirentK on active status and in good standing with the granting
organization for the separate title or specialty designation.
(c) The CPA firm shall offer to perform or advertise
professional services onK in the exact name of the CPA firm as
registered with the Board.
(d) Anv CPA or CPA firm offering to or performing
professional services via the internet shall include the following
information on the internet:
(4}
CPA business or CPA firm name:
principal place of business: u
business phone: and
North Carolina certificate number and North Carolina
as state of certification,
(e) The use of the phrase "certified public accountant(s)" or
"CPA(s)" jn or with the name of any business entity on
letterhead, reports, business cards, brochures, office signs,
telephone directories, or any other advertisements or forms or
solicitation is prohibited e.xcept for registered CPA firms.
Authonn-G.S. 55B-12: 5'C-2-01; 93-12(9).
.0307 CPA FIRM NAMES
(a) Deceptive Names Prohibited. A CPA or CPA firm shall
not trade upon the CPA title through use of any name that would
have the capacity or tendencv to deceive. The name of one or
more fomier members of the CPA firm, as defined jn 21 NCAC
8A .0301. ma\ be included jn the CPA firni name. The name of
a non-CPA owner in a CPA finn name is prohibited.
(b) Style of Practice. It is considered misleading if a CPA
firm practices under a name or style which would tend to imply
the existence of a partnership or registered limited liability
partnership or a professional corporation or professional limited
liabilitv company of more than one CPA shareholder or CPA
member or an association when in fact there is no partnership
nor is there more than one CPA shareholder or CPA member m
the of a CPA firm. For example, no CPA firm having just one
CPA owner nia\' have as a part of its name the words
"associates" or "company" or their abbreviations, ft is also
considered misleading if a CPA renders non-attest professional
services through a non-CPA firm using a name that implies any
non-licensees are CPAs or that is confusingly similar to the
name of a CPA fimi.
(c) Assum e d Nam e s Subj e ct to Approval. B e for e nny CPA
finn u se s an assum e d nam e (as d e scrib e d in G. S. 66 68. 75 1.1)
it must submit th e propo se d nam e for Board approval in ord e r to
assur e that s uch nam e is not misl e ading or d e ceptiv e to the
public. Any CPA firm that has continuously used an assumed
name approved by the Board prior to April J^ 1999. may
continue to use the assumed name, so long as the CPA firm js
only owned by the individual practitioner, partners, or
shareholders who obtained Board approval for the assumed
name. A CPA firm (or a successor fimi bv sale, merger, or
operation of law) mav continue to use the surname of a retired
or deceased partner or shareholder in the CPA firm's name so
long as that use is not deceptive.
.AiithorinG.S. 55B-12: 5''C-2-01: 93-12(9).
CHAPTER 32 - BOARD OF MEDICAL EXAMINERS
Notice is hereby given in accordance with G.S. 1508-21.2
that the North Carolina .Medical Board intends to adopt
the rules cited as 21 NC.4C 32M.0015; 21 .\'C.4C 32R .0001-
. 0004: 21 NC.4C 32S . 000 1-. 0018. amend the rules cited as 21
NC.4C 32F.0103: 21 NCAC 32M .000I-.0012 and repeal the
rules cited as 21 NCAC 320 .0001-.0021. Notice of Rule-
making Proceedings was published in the Register on January
I. l'^98 for 21 NCAC 32 F .0003. Notice of Rule-making
Proceedings was published in the Register on April 1. 1 998 for
21 NC.4C^32M.0001-.0012. .0015: 21 NC.4C 32R.000l-.0004.
Notice of Rule-making Proceedings was publish' d in the
Register on December 16. 1996 for 21 NC.4C 320 .0001 -.0021
and 21 NC4C 32S.000I-.0018.
Proposed Effective Date:
May 1, 1999 - 21 NCAC 32F .0003: 21 NCAC 32M .0001-
.0012. .0015: 21 NCAC 320 .0001-.0021: 21 NC4C 32S.0001-
.0018.
Janiian- 1, 2000 - 21 NC.4C 32R .0001 -.0004
A Public Hearing Mill be conducted on October 30. 1998 at the
North Carolitm Medical Board. 1201 From Street. Raleigh. NC
2 '609 at the following times:
21 SC.4C32F. 0003 -5:00p.m.
21 ^CA C 32 R . 000 1 -. 0004 -3:00p.m.
21 1SC.4C 32M .0001:0012,. 0015 - 1:00p.m.
21 \C.4C 320 .0001-.0021; 32S .0001:0018 - 9:00a.m.
Reason for Proposed Action:
21 A'C.4C 32F .0103 - This rule will allow compliance with
1997 NC Session Laws which states each physician's
registration fee is to be paid annually on each physician's
birthday, effective January 1. 1998.
21 SCAC32M .0001:0012. .0015 - The change in rules was
necessaiy in order to reflect actual process, to improve agency
13:8
NORTH CAROLINA REGISTER
October 15, 1998
709
PROPOSED RULES
responsiveness, to clunf\- rules and definitions for licensees in
order to maximize comprehension and thereby compliance.
21 \CAC 320 .0001:0021 - These rules will clarify the
licensing, discipline, and practice guidelines for physician
assistants and the physician assistant's supervising physicians.
21 .\C4CJ2R .0001 -.0004 - The statute alloMS the SC Medical
Board to write rules requiring physicians to complete no more
than 15(1 hours ol continuing medical education in a three year
period.
21 \C4C 32S .0001-0018 - These rules will clarify the
licensing, discipline, and practice guidelines for physician
assistants and the physician assistant's supervising physicians.
Comment Procedures: Comments may be mailed to Helen
Meelheim. Rule-iuakuig Coordinator at the .\'C Medical Board.
1201 Front Street. Raleigh. NC 2'609. Verbal comments may
be presented at the public hearing.
Fiscal Note: These Rules do not affect the expenditures or
revenues of state or local governitient funds. These Rules do not
have a substantial economic impact of at least Jive million
dollars (S5.000.000i in a 12-/iu>nth period.
SUBCHAPTER 32F - ANNUAL REGISTRATION
SECTION .0100 - REGISTRATION
.0103 FEE
Each ph\sician shall pa\ a bi e nnial an annual registration fee
of tw© one hundred dollars ( S2Q0.00 ) SIOO.OO to the Board
even,' odd numbered \ear in accordance with G.S. 90-15.1:
except, each physician holding a resident's training license shall
pay a bi e nnial an annual registration fee of t\\onr\ five fifteen
dollars (S25.00 ) ($15.00 ) and ever\ ph\sician who holds a
special \olunteer license shall pay a biennia l an annual
registration fee often dollars ($10.00).
Authority G.S. 90-15.1: 90-18(13): 90-18.1.
SUBCHAPTER 32M - APPRO\ AL OF NURSE
PRACTITIONERS
.0001
The
(2
(4)
DEFINITIONS
following definitions appK to this Subchapter:
"Medical Board" means the North Carolina Medical
Board.
"Board of Nursing" means the Board of Nursing of
the State of North Carolina.
"Joint Subcommittee" means the subcommittee
composed of members of the Board of Nursing and
Members of the Medical Board to whom
responsibility is gi\en b> G.S. 90-6 and G.S. 90-
I71.23(b)( 14) to de\elop rules to govern the
performance of medical acts b\ nurse practitioners in
North Carolina.
'Nurse Practitioners or NP" means a currentK'
licensed registered nurse approved to perform medical
acts who functions at th e dir e ction of or und e r the
sup e r\ision of under an agreement with a licensed
ph\sician for ongoin g super\ision. consultation-
collaboration and e\aluation of the thos e medical aetsr
acts performed. Onl> a registered nurse appro\ed b\
the Medical Board and the Board of Nursing ma\
legally identif\ oneself as a Nurse Practitioner. It is
understood that the nurse practitioner. b\ \ irtue of RN
licensure, is independentK accountable for those
nursing acts which he or she ma\ perform.
(5) "Nurse Practitioner .Applicant" means a registered
nurse who ma\ function prior to full appro\al as a
Nurse Practitioner in accordance with Rule .0003fe4
(b)(4) of this Subchapter.
(6) "Super\ision" means the ph\sician"s function of
overseeing medical acts performed b\ the nurse
practitioner.
(7) "Collaborati\e practice agreement" means the
arrangement for nurse practitioner-ph\sician
continuous a\ailabilit\ to each other for on-going
supervision, consultation, collaboration, referral and
e\aluation of care provided by the nurse practitioner.
(8)ffl "Primarv Superv ising Ph\sician" means the licensed
ph\sician approved by the Medical Board who. b>
signing the nurse practitioner application, is held
ocountable for the on-going sup e rvision super\ ision.
consultation, collaboration and evaluation of the
medical acts performed b\ the nurse practitioner as
defined in the site specific written protocols.
(a) The primar\ supervising physician shall
assume the responsibilitv of assuring the
Boards that the nurse practitioner is qualified
to perform those medical acts described in the
site specific written protocols.
(b) A physician [n a graduate medical education
program, whether fulh licensed or holding
onK a resident's training license, shall not be
named as a primary supervising phvsician.
(c) A phvsician jn a graduate medical education
program who js also practicing jn a non-
training situation mav supervise a nurse
practitioner in the non-training situation if fulK
licensed and approved to be a supervising
ph\ sician bv the Medical Board.
(d) All phvsicians who mav be a primary
superv ising physician of nurse practitioner(s)
in any manner shall be approved in accordance
w ith this Subchapter.
(9)f8-) "Back-up Supervising Physician" means the licensed
phvsician who. bv signing an agreement v\ith the
nurse practitioner and the primary supervising
physician(s). is shall be held accountable for
s up e rvising the p e rformanc e supervision.
consultation, collaboration and evaluation of medical
acts bv the nurse practitioner in accordance w ith the
site specific written protocols when the Primary
Supervising Phvsician is not available.
710
NORTH CAROLINA REGISTER
October 15. 1998
13:8
PROPOSED RULES
(a) The signed and dated agreements for each
back-up supervising physician(s) shall be
maintained at each practice site.
(b) A physician in a graduate medical education
program, whether fulh licensed or holding
only a resident's training license, shall not be
named as a back-up supervising ph\sician.
(c) A physician m a graduate medical education
program who js also practicing in a non-
training situation may be a back-up supervising
physician to a nurse practitioner in the non-
training situation if fulK licensed and has
signed an agreement w ith the nurse practitioner
and the primary supervising physician.
(I0)(4) "Approval" means authorization by the Medical
Board and the Board of Nursing for a registered nurse
to practice as a nurse practitioner in accordance with
this Subchapter.
(I IM -W "Written standing protocols" means the signed and
dated set of written practice guidelines maintained at
each practice site which describe the prescribing
privileges, treatments, tests and procedures that define
the scope of the nurse practitioner's medical acts in
that setting. Clinical practice issues that are not
covered by the written protocols require nurse
practitioner/physician consultation, and
documentation related to the treatment plan.
( 12) "Volunteer practice" means practice without
expectation of compensation or payment ( monetaiA'.
[n kind or otherwise) to the nurse practitioner either
directly or indirectly.
( 13) "Disaster" means a state of disaster as defined in G.S.
l66A-4(3) and proclaimed b> the Governor, or b\ the
General Assembly pursuant to G.S. I66A-6.
(14) "Interim Status" means the pri\ ilege that is given to a
nevs graduate of an approved nurse practitioner
educational program or a registered nurse seeking
initial approval in North Carolina with limited
priyileges. as defined in Rule .0003(b)(4) of this
Subchapter, while awaiting final approval to practice
as a nurse practitioner.
(15) "Temporary Approval" means authorization by the
Medical Board and the Board of Nursing for a
registered nurse to practice as a nurse practitioner in
accordance with this Rule for a period not to exceed
18 months yvhile awaiting notification of successful
completion of the national certification examination.
Author in- G.S. 90-6: 90- 1 Si 14): 90-18.2.
.0002 SCOPE OF PRACTICE
The nurse practitioner shall be responsible and accountable for
the continuous and comprehensive management of a broad range
of personal health services for which the nurse practitioner is
educationally prepared and for which competency has been
maintained, with physician supervision and collaboration as
described in 21 NCAC 32M .0010. 32M .0009. These services
include but are not restricted to:
( 1 ) promotion and maintenance of health;
(2) prevention of illness and disability ;
(3) diagnosing, treating and managing acute and chronic
illnesses;
(4) guidance and counseling for both individuals and
families;
(5) prescribing, administering and dispensing therapeutic
measures, tests, procedures and drugs;
(6) planning for situations beyond the nurse practitioner's
expertise, and consulting yvith and referring to other
health care providers as appropriate; and
(7) evaluating health outcomes.
.4 lit hor in- G.S. 90-18(14).
.0003 NURSE PRACTITIONER APPROVAL
(a) Qualifications for nurse practitioner approval. A
registered nurse shall be approved by the Medical Board and the
Board of Nursing Board before the individual applicant may
practice as a nurse practitioner. The Boards may grant approval
to practice as a nurse practitioner to an individual applicant who:
( 1 ) is currently licensed as a registered nurse by the Board
of Nursing;
(2) has successfully completed an approved educational
program as outlined in Rule .0004 of this Subchapter;
or, as of January \^ 2000. meets the certification
requirements set forth in Rule .0004(c) of this
Subchapter;
(3) has an unrestricted license to practice as a registered
nurse and, if applicable, an unrestricted approval to
practice as a nurse practitioner unless the Boards
consider such condition and agree to approval;
(4) submits any infomiation deemed necessary to evaluate
the application;
(5) has a collaborative practice agreement with a primary
supervising phys i cian agr ee m e nt; physician; and
(6) pays the appropriate fee.
(b) Application for nurse practitioner approval.
(1)
(2)
(3)
Application for nurse practitioner approval shall be
made upon the appropriate forms and must shall be
submitted jointly by the nurse practitioner and primary
supervising physician(s).
Applications for first-time approval in North Carolina
shall be submitted to the Board of Nursing Board and
then proc e ss e d approved by both Boards as folloyvs:
(A) the Board of Nursing Board will verify'
compliance with Subparagraphs (a)( 1 ) - (4) of
this Rule;
(B) the Medical Board will verify- compliance with
Subparagraphs (a)(4) - (6) of this Rule; and
(C) the appropriate Board will notify applicant of
final approval status.
Applications for approval of changes in practice
arrangements for a nurse practitioner currently
approved to practice in North Carolina:
(A) addition or change of primary supervising
13:8
NORTH CAROLINA REGISTER
October 15, 1998
711
PROPOSED RULES
(B)
(C)
ph\sician shall be submitted to the Medical
Board;
request for change(s) in the scope of practice
shall be submitted to the Nur s ing Board; Joint
Subcommittee: and
the appropriate Board will notify applicant of
final approval status.
(4) Interim status for nurse practitioner applicant may be
granted as follows:
(A) a registered nurse who is a new graduate of an
approved nurse practitioner educational
program as set forth in Rule .0004 of this
Subchapter: or
( B ) a registered nurse seeking first time approval to
practice as a nurse practitioner in North
Carolina who has worked previously as a nurse
practitioner in another state and who meets the
nurse practitioner educational requirements as
set forth in Rule .0004 of this Subchapter: and
(C) the Boards Nur s ing Board has have issued
interim approval with the follov\ing limitations:
(i) no prescribing privileges:
(ii) primary or back-up physicians phv s i cian
on sit e shall be continuously available
for appropriate ongoing supervision.
review consultation, collaboration and
countersigning of notations of medical
acts in all patient charts v\ ithin 2 1 hour s
tvso working days of nurse practitioner
applicant-patient contact: and
(iii) face-to-face consultation with the
primary supervising physician shall be
weekly with documentation of
consultation consistent with Rule
.0009(d)(4) of this Subchapter: and
(iv) fHi4 may not exceed a period of six months.
(5) Beginning .January 1. 2000. first time applicants who
meet the qualifications for approval, but are awaiting
ceilitlcation from a national credentialing bodv
a pproved by the Board of Nursing, may be granted a
temporary approv al to practice as a nurse practitioner.
Temporan approval is valid for a period not to exceed
18 months from the date temporary ap proval is
granted or until the results gt" the applicant's
certification examination are available. v\hichever
comes first.
(6)f^ The registered nurse who was prev iousK approved to
practice as a nurse practitioner in this state shall:
(A) meet the nurse practitioner approval
requirements as stipulated in Subparagraphs
(a)(1). (a)(3) -(aK6):
(B) complete the appropriate application: aftd
(C) receive notification of approval from the
appropriate Board. Board: and
(D) meet the consultation requirements as outlined
in Ruje .0009(d)(3) and (1) of this Subchapter.
(7) (-^ If for any reason a nurse practitioner
discontinues working m vs ithin the approved
sup e rvision phy s ician(s) nurse practitioner-
supervising physician(s) arrangement, the
Boards shall be notified in writing and the
nurse practitioner's approval shall
automatically terminate or be placed on an
inactive status until such time as a new
application is approved in accordance with this
Subchapter. Special consideration mav be
given in an emergency situation.
(8) Volunteer Approval for Nurse Practitioners. The
Boards mav grant approval to practice m a volunteer
capacit^ to a nurse practitioner v\ho has met the
qualifications as outlined m Rule .0003(a)( 1 ) - (6) of
this Subchapter.
Auihorin- G.S. 90-18(13). il4i: 90-18.2: 90-ri.20i'): 90-
l~ 1.23(b): 90-ri.42.
.0004 REQUIREMENTS FOR APPROVAL OF NURSE
PRACTITIONER EDUCATIONAL PROGRAMS
(a) The Joint Subcommittee shall establish the requirements
for approval of nurse practitioner educational programs.
(b) A nurse practitioner applicant who completed a nurse
practitioner educational program prior to December 31. 1999
shall provide to the Board of Nursing evidence of successful
completion of a course of formal education which contains a
core curriculum including 400 contact hours of didactic
education and 400 contact hours of preceptorship or superv ised
clinical experience.
(1 ) The core curriculum shall contain as a minimum the
follow ing components:
(A) health assessment and diagnostic reasoning
including:
(i) historical data;
(ii) physical examination data;
(iii) organization of data base;
(B) phannacology :
(C) pathophysiology;
(D) clinical management of common health care
problems and diseases related to:
(i) respiratory system;
(ii) cardiovascular system;
(iii) gastrointestinal system:
(iv) genitourinary sv stem;
(v) integumentary system;
(vi) hematologic and immune systems;
(vii) endocrine system:
(viii) musculoskeletal system;
(ix) infectious diseases;
(x) nervous system;
(xi) behavioral, mental health and substance
abuse problems:
(E) clinical preventative services including health
promotion and prevention of disease:
(F) client education related to Parts (b)( 1 )(D) and
(E) of this Rule: and
712
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
J
(G) role development including legal, ethical.
economical, health policy and interdisciplinary
collaboration issues.
(2) Nurse practitioner applicants who ma> be exempt
from components of the core curriculum requirements
listed in Subparagraph (b)(1) of this Rule are:
(A) ' An> nurse practitioner approved in North
Carolina prior to Januan. 18. 1981. is
permanently exempt from the core curriculum
requirement.
(B) A nurse practitioner certified b\ th e Nationa l
Certification Corporation of th e Obst e trics.
G\nccolog> aftd N e onata l Specia l ist s :
Association of Wom e ns H e alth of N e onatal
Nurses: — Am e rican — Nurs e s — Cr e d e ntialing
Commission: Am e rican Nurs e s Association
and National C e rtification of P e diatric Nurs e
Practition e rs and Nur se s a national
credentialing bodv approved by the Board of
Nursing who also provides evidence of
satisfying Parts (bKl)(A) - (C) of this Rule
shall be exempt from core curriculum
requirements in Parts (b)(1)(D) - (G) of this
Rule. Evidence of satisfying Parts (b)( 1 )(A) -
(C) of this Rule shall include, but mav not be
limited to:
( i ) a narrative of course content: and
(ii) contact hours.
(C) A nurse practitioner seeking initial approval
after January 1- 1998 shall be exempt from the
core curriculum requirements if certified as a
nurse practitioner in his'her specialty by a
national credentialing body approved by the
Board of Nursing as set forth in Subparagraph
(b) of this Rule and when initial certification
was obtained after ,lanuar\ _L 1998.
(D) fG4 A nurse practitioner applicant, whose formal
education does not meet all of the stipulations
in Subparagraph (b) of this Rule. ma\ appeal to
the Board of Nur s ing Joint Subcommittee on
the basis of other education and experience.
(c) Instead of educational program approval. aU nurse
practitioner applicants v\ho are applying for or have received.
first time approval to practice as a nurse practitioner on or after
January f, 2000 shall be certified by a national credentialing
body approved by the Board of' Nursing or be awaiting initial
certification by a national credentialing bod\ approved by the
Board of Nursing for a period not to exceed 1 8 months from date
temporary approval is granted.
AiahorinG.S. 90-IH(I4i: 90-1' 1.42.
.0005 ANNUAL RENEWAL
(a) Each registered nurse who is approved as a nurse
practitioner in this state will, upon notification from the Medical
Board. annualK renew said approval bv :
( 1 ) Verifying current RN licensure;
(2) Submitting the fee required in Rule .0012 of this
Subchapter; and
(3) Completing the renewal form.
(b) For the nurse practitioner who had first time approval to
practice after January 1, 2000. provide evidence of certification
or recertification by a national credentialing body approved by
the Board of Nursing.
fb)(c) If the nurse practitioner has not renewed within 30 days
of renewal date, set by the Medical Board, the approval to
practice as a nurse practitioner will lapse.
.Authorises. 90-6: 90-18(141: 90-l'l. 23(b).
.0006 CONTINUING EDUCATION (CE)
In order to maintain nurse practitioner approval to practice,
beginning no sooner than two years after initial approval has
been granted, the nurse practitioner mu s t shall earn 30 hours of
continuing education ever} two years. At least three hours of
continuing education every two years shall be the study of the
medical and social effects of substance abuse including abuse of
prescription drugs, controlled substances, and illicit drugs.
Continuing Education hours are those hours for which approval
has been granted by the American Nurses Credentialing Center
(ANCC) and Accreditation Council on Continuing Medical
Education (ACCME). or other national credentialing bodies
approved by the Board of Nursing consistent with Rul e
.000 ' I(2)(B) of this S e ction. Nursing. Documentation shall be
maintained by the nurse practitioner at each practice site and
made available upon request to either Board.
.4iiihorlnG.S. 90-6: 90-18(14): 90-1" 1.23(14).
.0007 INACTIVE STATUS
(a) Any nurse practitioner who wishes to place his or her
approval on an inactive status may notify' the Boards by
completing the form supplied by the Boards.
(b) The registered nurse with inactive nurse practitioner status
shall not practice as a nurse practitioner.
(c) The registered nurse v\ ith inactive nurse practitioner status
who reapplies for approval to practice shall be required to meet
the qualifications for approval as stipulated in Rule .0003(a)( 1 ).
(a)(3) - (a)ff) (a)(6) and (b) of this Subchapter.
.-liilliorliyG.S. 90-18(13): 90-18.2: 90-1" 1.36.
.0008 PRESCRIBING AUTHORITY
(a) The prescribing stipulations contained in the rules apply
to writing prescriptions and ordering the administration of
medications.
(b) Prescribing and dispensing stipulations are as follows:
( 1 ) Drugs and devices that may be prescribed by the nurse
practitioner in each practice site must shall be
included in the written s tand i ng protocols as outlined
in Rule .0009(2) .0009(b) of this Subchapter.
(2) Controlled Substances (Schedules 2. 2N. 3. 3N. 4. 5)
defined bv the State and Federal Controlled
Substances Acts may be procured, prescribed or
13:8
NORTH CAROLINA REGISTER
October 15, 1998
713
PROPOSED RULES
ordered as established in \\ritten standing protocols.
pro\iding ail of the following restrictions
requirements are met:
(A) the nurse practitioner has an assigned DEA
number which is entered on each prescription
for a controlled substance;
(B) dosage units for schedules 2. 2N. 3 and 3N are
limited to a €>fte — w ee k's — suppK. exc e pt
D e xtroamph e tamin e . — M e thylph e nidat e — and
P e molin e for th e tr e atm e nt of Att e ntion D e ficit
Di s o rde r or At te nt i on D e fic i t Disord e r with
Hyp e ract i v i t> (ADHD) vshich ar e limit e d to a
30 day suppK : and
(C) the prescription or order for schedules 2. 2N. 3
and 3N ma\ not be refilled.
(3) The nurse practitioner may prescribe a drug not
included in the site-specific written standing protocols
onl\ as follows:
(A) upon a specific written or verbal order obtained
from th e s up e rvi s ing a primary or back-up
supervising ph> sician before the prescription or
order is issued b\ the nurse practitioner: and
(B) the written or verbal order as described in Part
(b)(3)(A) of this Rule mast shall be entered
into the patient record and sign e d b> * h e nurs e
practition e r w ith a notation that it is i ued on
the specific order of th e s up o rv ising phvsician.
a primary or back-up su perv ising ph\ sician and
signed by the nurse practitioner and the
physician.
(4) Refills may be issued for a period not to exceed one
year except for schedules 2. 2N. 3 and 3N controlled
substances which may not be refilled.
(5) Each prescription must shall be noted on the patient's
chart and include the follow ing information:
(A) medication and dosage:
(B) amount prescribed:
(C) directions for use:
(D) number of refills; and
(E) signature of nurse practitioner.
(6) The prescribing number assigned by the Medical
Board to the nurse practitioner must appear on all
prescriptions issued by the nurse practitioner.
(7) Prescription Format:
(A) All prescriptions issued by the nurse
practitioner shall contain the supervising
phy sician(s) name, the name of the patient, and
the nurse practitioner's name, telephone
number, and prescribing number.
(B) The nurse practitioner's assigned DEA number
shall be written on the prescription form when
a controlled substance is prescribed as defined
in Subparagraph (b)(2) of this Rule.
(c) The nurse practitioner must obtain approval to dispense
the drugs and devices included in the written standing protocols
for each practice site from the Board of Pharmacy, and shall
carry out the function of dispensing dispense in accordance w ith
21 NCAC 46 .1700, which is hereby incorporated by reference
including subsequent amendments of the referenced materials.
Aiilhorin- G.S. 90-6: 90-18(14): 90-1S.2: 90-1' 1.23(14): 90-
ri. 42: 58 Fed. Reg. 31.1' 1 (1993) (to be codified al 2 1 C. F.R.
1301).
.0009 QUALITY ASSURANCE STANDARDS FOR A
COLLABORATIVE PRACTICE AGREEMENT
Sup e rvision shall b e provid e d by th e approv e d physician(s) as
follows:
(5^
f^
Availability;
(a-) Tlw Guperx ising physician shaH be
continuously av'ailabl e fer dir e ct
communications — by radio. — t ele p h on e. — er
telecommunicat i ons.
^ The
sup e rvising physician shall b e r e adily
availabl e — far — con s ultation — ef — r e ferrals — of
pati e nts from th e nurse practition e r.
(€4 If th e nurs e practition e r is to p e rfomi duti e s at
a s i t e away from the sup e rvising physician, fhe
application — must
ea#y
spec i fy tlw
circumstanc e s
and
-the-
sup e rvi s ory
arrang e m e nts.
Writt e n Standing P rot oc ol s:
fa-) Writt e n — standing — protocols — approv e d — attd
s ign e d b> both th e sup e rv ising physician(s) and
th e nurs e practition e r shall b e maintain e d in
e ach practic e sit e :
{h) Th e writt e n s tanding protocols shall includ e th e
drugs, devic e s, m e dica l tr e atm e nts, t e sts and
proc e dur e s that may b e pr e scrib e d, ord e r e d and
impl e m e nt e d — b^ — the — nurs e practition e r
con s i s t e nt with Rul e .0008 of this Subchapt e r,
and w hich ar e appropriat e for th e diagnosis and
tr e atm e nt of th e most commonly encountered
health probl e ms in that practic e s e tting;
^ The written standing protoc o ls s hall includ e a
pr e d e t e nnin e d plan for e m e rg e ncy services;
(4) Th e writt e n standing protocol s shall sp e cify th e
proc e ss by which the nurs e pract i tion e r steH
r e f e r a pati e nt to a physician oth e r than an
approv e d s up e rv ising phv sician;
fe) Th e nurs e practition e r shall b e pr e par e d to
d e monstrat e upon r e qu e st to a memb e r of
e ith e r th e Board of Nur s ing or th e Medical
Board, or an ag e nt, th e ab i lity to p e rfomi
m e dical acts a s outlined in th e s it e sp e cific
writt e n standing protocols.
Count e rsigning of M e dical ;\ctG:
fa-) Th e maximum tim e int e rval b e tw ee n th e nurs e
practition e r's contact with th e pati e nt and
m e dical r e cord r e v i e w and count e rsigning of
m e dical act s bv th e sup e rvising physician is
sev e n davs for outpati e nt (clinic offic e ) nurs e
practition e r pati e nt contacts.
fb^ The — tiffle — int e rval — for — count e rsigning — of
714
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
}
notations of m e dical acts in th e m e dical r e cords
ef inpati e nts — (hospital. — long t e rm — eare
institutions) b\ th e sup e rvising phx s ician s hall
comply with th e ru les and regulations of th e
institution, but at a minimum:
(+) — th e initial workup, m e dical ord e rs and
tr e atm e nt plan, sha ll b e count e rsign e d
within s e v e n da> 5 of th e tim e of th e
nurse practition e r pati e nt contact: and
(+i^ in th e acut e inpati e nt se tting, th e initial
work up. m e dical ord e rs and tr e atm e nt
f4afl shall b e count e rsign e d and dat e d
within two xvorking da> s of th e nurs e
practition e r pati e nt contact.
fe4 The — fime — int e rva l — b e tw oe n — the — nurs e
practition e r pati e nt contact and countersigning
b^^ — tb« sup e rv i sing phv s ic i an of the nurse
practition e r's notations of m e dical acts in the
m e dical r e cords — of — pati e nts — in — sp e cial
community bas e d — eare — programs. — s«€h — as
dialvsis and hospic e , shall compiv with th e
rul e s and r e gulations of th e sp e cific car e
program.
(1) Sup e rvising Phvsicians:
{it) A physician in a graduat e m e dical e ducation program.
wh e th e r full> lic e ns e d or holding onlv a r e sid e nt's
training l ic e ns e , sha l l not b e nam e d a s a sup e rv ising
physician.
<%^ A phvsician in a graduat e m e dical e ducation program
who is also practicing in a non training s i tuation mav
s up e rvis e a nurse practitioner in th e non training
situ'.tion if fullv licensed and approv e d to supervise
by th e M e dical Board.
(e^ — AW — phy s icians — w4w — may — s up e rvis e — the — nur se
practition e r in anv mann e r shall b e approv e d in
accordanc e — with — this — Subchapt e r — b e for e — nurs e
practition e r s up e rvi s ion occurs.
(a) Availability: The primary or back-up supervising
ph\sician(s) and the nurse practitioner shall be continuously
available to each other for consultation by direct communication
or telecommunication.
(b) Written Protocols:
(1 ) Written protocols shall be agreed upon and signed by
both the primary supervising phvsician and the nurse
practitioner, and maintained in each practice site.
(2) Written protocols shall be reviewed at least vearlv.
and this review shall be acknowledged by a dated
signature sheet, signed by both the primary
supervising phvsician and the nurse practitioner,
appended to the written protocol and available for
inspection bv members or agents of either board.
(3) The written protocols shall include the drugs, devices,
medical treatment, tests and procedures that mav be
prescribed, ordered and implemented by the nurse
practitioner consistent with Rule .0008 of this
Subchapter, and which are appropriate for the
diagnosis and treatment of the most commonly
encountered health problems in that practice setting.
(4) The written protocols shall include a pre-determined
plan for emergency services.
(5) The nurse practitioner shall be prepared to
demonstrate the ability to perform medical acts as
outlined in the written protocols upon request by
members or agents of either Board.
(c) Quality Improvement Process:
(1)
iH
01
The primary supervising phvsician and the nurse
practitioner shall develop a process for the on-going
review of the care provided m each practice site to
include a written plan for evaluating the quality ot"
care prov ided for one or more frequently encountered
clinical problems.
This plan shall include a description of the clinical
problem(s). an evaluation of the current treatment
interventions, and jt' needed, a plan for improving
outcomes w ithin an identitled time-frame.
The quality improvement process shall include
scheduled meetings betv\een the primary supervising
phvsician and the nurse practitioner at least every six
months. Documentation for each meeting shall:
IB)
IC]
identi1\ clinical problems discussed, including
progress toward improving outcomes as stated
in Subparagraph (c)(2) of thus Rule, and
recommendations, if anv. for changes in
treatment plan(s):
be signed and dated by those who attended:
and
be available for review by members or agents
of either Board for the previous five calendar
years and be retained by both the nurse
practitioner and phvsician.
(d) Nurse Practitioner-Phvsician Consultation. The following
requirements establish the minimum standards for consultation
betv\een the nurse practitioner primary or back-up supervising
physician(s):
( 1 ) The nurse practitioner with temporary approval shall
have:
(A) review and countersigning of notations of
medical acts by a primary or back-up
superv ising phvsician v\ithin seven days of
nurse practitioner-patient contact for the first
six months of collaboration. This time-frame
includes the period of interim status.
(B) face-to-face consultation vsith the primary
supervising phvsician on a weekly basis for
one month after temporary approval is
achieved and at least monthly throughout the
period of temporary approval.
(2) The nurse practitioner with first time approval to
practice shall have:
(A) review and countersigning of notations of
medical acts by a primary or back-up
supervising phvsician v\ithin seven davs of
nurse practitioner-patient contact for the first
six months of collaborative agreement. This
13:8
NORTH CAROLINA REGISTER
October 15, 1998
715
PROPOSED RILES
time-frame includes the period of interim
status.
(B) face-to-face consultation with the primar\
super\isinL! ph\sician on a weekK basis for
one month after full appro\al js received and at
least monthK for a period no less than the
succeeding tl\e months.
(3) The nurse practitioner pre\ iousK appro\ ed to practice
in North Carolina who changes priman super\ isini;
ph\sician shall ha\e face-to-face consultation w ith the
primarx super\ isinij ph\ sician weekK for one month
and then monthK for the succeedim; fi\e months.
(4) Documentation of consultation shall:
(A) identify clinical issues discussed and actions
taken:
(B) be signed and dated b^.- those who attended: and
(C) be a\ailable for re\iew b\ members or agents
of either Board for the pre\ious fi\e calendar
\'ears and be retained by both the nurse
practitioner and ph\sician.
AiirhorinG.S. 90-6: 9U-W(14i: 90-1H.2: 90-1 ~ 1. 23(14).
.0010 METHOD OF IDENTIFICATION
The nurse practitioner shall wear an impropriate name tag
spelling out the words "Nurse Practitioner Practitioner".
Aiiihonn- G.S. 90-18(14).
.0011 DISCIPLINARY .ACTION
The appro\al of a nurse practitioner ma> be restricted, denied
or terminated b> the Medical Board and the registered nurse
license may be restricted, denied, or terminated b\ the Board of
Nursing. Nur s ing Board, if. after due notice and hearing in
accordance with pro\isions of Article 3A of G.S. 150B. the
appropriate Board shall find one or more of the follow ing:
( 1 ) that the nurse practitioner has held hims e lf
himself herself out or permitted another to represent
h+fft him her as a licensed ph\ sician:
(2) that the nurse practitioner has engaged or attempted to
engage in the performance of medical acts other than
according to the written protocols and collaborati\e
practice agreement: at th e dir e ction of or und e r th e
Gup e r\ision of. a phy s ician lic e ns e d b\ the M e dical
Board who is appro\ e d b\ the Board to b e that nurs e
practition e r's sup e rx i s ing ph> sician:
t^ that th e nurse practition e r has p e rform e d or att e mpt e d
to p e rform m e dical act s not approved in th e s it e
specific standing protocols or for which th e nurs e
practition e r is not qualified b> education and training
to p e rform.
(?)f-)4 that the nurse practitioner has been con\ icted in an)
court of a criminal offense:
(4h-^4 that the nurse practitioner is adjudicated mentalK
incompetent or that the nurse practitioner's mental or
ph\sical condition renders the nurse practitioner
unable to safeK function as a nurse practitioner: or
i5jt4j that the nurse practitioner has failed to compK with
an> of the provisions of this Subchapter.
.Auihorin- G.S. 90-18(14): 90-1' 1.3'.
.0012 FEES
(a) .An application fee of one hundred dollars (SIOO.OO) shall
be paid at the time of initial application for approval and each
subsequent application for approval to practice. Th e on e
hundr e d dollar ($100.00) All initial, subsequent and volunteer
application -fee fees shall be equallv div ided betw een the Board
of Nursing and the Medical Board. No other fees shall be
shared. .Application fee shall be twenty dollars (S20.00) for the
volunteer approval.
(h) The fee for annual renev\al of approval, due Julv 1. shall
betlft> dollars (S50.00).
(c) The fee for annual renew, al of volunteer approval, due Juh
1. shall be ten dollars iSl 0.00).
idjfe) No portion of anv fee in this Rule shall be refundable.
.Aiithorin- G.S. 90-6.
.0015 PRACTICE DL RING A DISASTER
A nurse practitioner approved to practice in thjs State or
another state js authorized to perform medical acts, tasks, or
functions as a nurse practitioner under the su pervision of a
physician licensed to practice medicine in Nonh Carolina during
a disaster within a count\ m which a state of disaster has been
declared or counties contiguous to a county m which a state of
disaster has been declared. The nurse practitioner shall notify
the Boards jn writing of the names, practice locations and
telephone numbers for the nurse practitioner and each primary
superv ising phv sician within 15 davs of the first performance of
medical acts, tasks, or functions as a nurse practitioner during
the disaster. Teams of physician(s) and nurse practitioners I
practicing pursuant to this Rule shall not be required to maintain
on-site documentation describing superv ison arrangements and
instructions for prescriptive authority as otherwise required
pursuant to Rules .0008 and .0009 of this Subchapter.
.Authonn G.S. 90-1 S( 13). (14): 90-18.2: 90-1'!. 20('): 90-
r 1.23(b): 90-ri.42.
SUBCHAPTER 320 - PH^ SICIAN ASSISTANT
REGULATIONS
.0001 DEFINITIONS
Th e follov\ ing d e finition s appK to this Subchapt e r:
f+-) "Board" m e ans th e North Carolina M e dical Board.
{2^ "Physician .A ss i s tant" m e ans a person lic e ns e d bv and
r e gist e red with th e Board to perform m e dical acts,
tasks. — or functions — und e r th e — sup e rvision — of a
physician lic e ns e d bv th e Board, who p e rforms tasks
traditionally p e rform e d bv th e phv sician. and who has
graduated from a phvsician assistant or surg e on
assistant program accr e dited bv th e Commission on
Accr e ditation of jMli e d H e alth Education Programs.
7] 6
NORTH C.AR0LIX4 REGISTER
October 15. 1998
13:8
PROPOSED RULES
or its pred e c e ssor or succ e ssor ag e nci e s.
^ "Ph>'sician Assistant Lic e ns e " nr ^ ans th e docum e nt
is s u e d by th e Board showing approva l — for th e
ph\sician assistant to p e rfonn m e dica l act s , tasks, or
functions und e r North Carolina law.
(4) "Registering" m e ans paying the annua l f ee and
providing th e infonnation r e qu e sted b\ th e Board as
outlin e d in Rul e .0005 of this Subchapt e r.
{§r) "Sup e rvising Physician" m e ans a physician who i s
l i c e n s ed by th e Board and who is not prohibit e d by
th e Board from sup e rv ising physician assi s tants. Th e
phy si cian — HWi — s e rv e — as — a — primary — sup e rvi s ing
ph\ sician or as a back up sup e rvising phv s ician .
-fa) Th e "Primary Sup e rvising Ph\ sician" is th e
phy si cian who. by signing th e application to
th e Board, acc e pts full r es ponsibility for th e
physician a s si s tant's m e dical activiti e s and
prof e s s ional conduct at all tim e s, wheth e r th e
phy s ician p e rsona l ly is providing sup e rvi s ion
or th e s up e rvision is b ei ng pro\ id e d b\ a Back
«p — Sup e rv i sing — Phvsician. The — Primar\
Sup e rvising — Physician — shaH — as s um e — tetal
r e sponsibility ' for assuring the Board that the
physician assistant is qualifi e d b\ e ducation
and training to p e rform all m e d i cal acts
requ i red of th e phvsician assistant and shall
assume total r e sponsibi l ity for th e phy s ician
assistant's performanc e in the particular field
or fi e lds in which th e phvsician a s sistant i s
e xp e ct e d to p e rfonn m e dical acts.
Th e "Back up Sup e rvising Phvsician" m e an s
th e phvsician who. by si^jning th e stat e m e nt
r e quir e d in Rul e .0010 of this Subchapt e r,
acc e pts th e r es pon s ib i lity for sup e rvi s ion of th e
phv sician assistant's act i viti e s in the ab se nc e of
th e Primary Sup e rvising Physician. The Back
up Sup e rvising Phvsician is responsibl e for th e
activiti e s of th e phvsic i an a s si s tant onlv wh e n
providing sup e rvision.
(^
^
accredit e d by th e Commission on Accr e ditation of
All ie d H e alth Education Programs or its pr e decessor
or s ucc e ssor ag e nci e s and: if l i censed in North
Carolina — after — ivffie — \-. — 190 4 . — has — succ e ssful K
compl e t e d a lic e nsing e xamination approv e d by the
Board:
(-H c e rtifi e s that he or sh e is mentally and physically abl e
to e ngag e saf e lv in practic e a s a physician assistant:
{^ has no lic e ns e , certificate, or registration a s a
phv s ician — assistant — currently — und e r — disciplin e ,
r e vocation. — su s p e nsion — er — probation — fer — caus e
r e sulting from th e appl i cant's practic e a s a physician
as s i s tant:
f6-) has aood moral charact e r: and
f7^ submits to th e Board anv oth e r information th e Board
d ee ms — n e c e s s ary — te — e valuate — the — applicant's
qualifications.
Authority G.S. 90-11: 90-1 S( 13): 90-1 H.l.
.0003 TEMPORARY LICENSE
Th e Board may grant a t e mporary license to an app l icant who
m ee ts th e qualifications for a license e xc e pt that th e applicant
has not v e t tak e n a Board approv e d c e rtily ing e xamination or th e
applicant has tak e n a Board approv e d c e rtifi ing e xamination and
is awaiting the results. A t e mporarv lic e ns e is valid:
(-H for on e v e ar from th e dat e of issu e : or
<-r-) until th e r es ults of an applicant's e xamination ar e
availabl e : or
f34 until th e Board m ee t s and consid e rs th e applicant's
r e qu es t for a lic e ns e . — Th e Board mav e xt e nd a
t e mporary lic e n se in th e e v e nt an applicant fails to
pass th e c e rtifying e xam, upon a major i tv vot e of th e
Board m e mb e rs, for a p e riod not to e xc ee d on e v e ar.
This option is availab le to on l y thos e applicants who
have m e t all oth e r crit e ria. Und e r no c i rcum s tances
mav th e Board grant mor e than on e e xt e nsion of a
t e mporal^ lic e ns e .
m e an s ov e rs ee ing the activ iti e s of and Autharin- G.S. 90-18(1 3l: 90-18.1.
supervising
accepting the responsibilitv for. th e m e dical s e rvic e s
r e nd e red by a phy s ician ass i stant.
Authorin G.S. 90-181 1 3 1: 90-18.1.
.0002 QUALIFICATIONS FOR LICENSE
Exc e pt as otherwis e provid e d in this Subchapt e r, an individual
.0004 INACTIVE LICENSE STATUS
By notify ing th e Board in vsriting any physician assistant may
e l e ct to place his or h e r lic e ns e on an inactive status. — A
phvsician assistant with an inactiv e lic e ns e shall not practic e as
a physician assi s tant. Anv phv s ician assistant who e ngag e s in
practic e whil e h is or h e r lic e ns e is on inactiv e status shall b e
shall obtain a licens e from th e Board b e for e th e individual mav consid e r e d to b e practicing without a lic e ns e , which shall b e
practic e as a physician assi s tant. Th e Board mav grant a license grounds for disciplin e und e r G.S. 90 M (a) (7). A physician
' ifl-be
as a physician assistant to an applicant who has m e t all th e
following crit e ria:
f-H submits a completed application on forms provid e d by
th e Board:
(2) pavs th e fee e stablish e d by Rul e .0021(1) in this
Subchapt e r:
{?fj ha s succ e ssfully compl e t e d an e ducational program
fer — physician — as s i s tant s — er — surg e on — assistants
assistant r e qu e sting r e activation from i nact i v e status
r e quir e d — te — pay — the — curr e nt — r e n e wal — fee; — te — provid e
docum e ntat i on to th e Board v e rifying compl e t i on of continuing
m e dical e ducation during th e pr e c e ding tv\ o > e ars as r e quir e d in
Rul e .0006 of this Subchapt e r, and sha l l b e r e quired to m ee t th e
crit e ria for r e n e wa l as sp e cifi e d in 21 NCAC 320 .0005.
AulhnrlnG.S. 90-18(13): 90-18.1.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
717
PROPOSED RULES
.0005 ANNUAL REGISTRATION
Each person \sho holds a lic e ns e as a phxsician assistant in
.0009 PRESCRIPTIVE AUTHORITY
A phxsician assistant is authoriz e d to proscrib e , ord e r and
tW
state sha l l, upon notitlcation from th e Board, annuallx administer drugs and m e dical de\ic e s subj e ct to th e following
r e gister th e licens e at such time as dir e ct e d b> th e Board b\ :
fH s ubmitting th e f ee r e quir e d in Rul e .0021 of this
Subchapt e r:
^5-) compl e ting th e Board's registration form.
AiithorinG.S. 90-15: 90-18(1 3 1: 90-1 8. 1.
.0006 CONTINUING MEDICAL EDUCATION
■Ifl — ord e r — te — maintain — phx s ician — a s si s tant — licensure.
docum e ntation must b e ma i ntain e d b\ th e phxsician a sr .istant of
100 h ours o f continuing medical e ducation (CME) compl e t e d for
e \ e r\ X\\o \ e ar p e riod, at l e ast 4 hours of which must b e
Am e rican i\cad e m\ of Physician .Xssistants Cat e gory 1 CME or
th e e quixalent. — CME docum e ntation must b e a\ailabl e for
in s p e ction b> th e Board or an ag e nt of th e Board upon r e qu e st.
.\n> phx s ic i an assistant uho pr e scrib e s controll e d sub s tances
s hall compl e t e at l e ast thr ee hours of CME e \ e r> two \ e ars on
th e m e dical and social e ff e cts of th e misus e and abus e of
alcohol, nicotin e . — pr e scription drugs (including controll e d
substanc e s), and illicit drugs.
Aurhorin- G.S. 90-18il3i: 90-1"^.!.
.0007 EXEMPTION FROM LICENSE
Nothing in this Subchapt e r shall b e constru e d to r e quir e
lic e nsur e und e r 2 1 NC.AC 320 of:
i-1-4 a phxsician assistant stud e nt enroll e d in a phxsician
a s sistant or surg e on assistant educational program
accr e dit e d b\ th e Commission on Accr e ditation of
Alli e d H e alth Education Programs or its succ e ssor
organizations: or
^ a phxsician assistant e mplo\ e d in th e s e r\ic e of th e
f e d e ral gox e mment \xhil e p e rforming duti e s incid e nt
to that e mploxment: or
(5-) ag e nts or e mplox ee s of phxsicians who p e rform
d e l e gat e d tasks in th e offic e of a phxsician but who
ar e not r e ndering s e rxic e s as a phxsician assistant or
id e ntifung th e ms e lx e s as a phxsician assistant.
Aurhorin- G.S. 90-18/13/: 90-18.1.
conditions:
f-H Th e phxsician a s sistant has b ee n assign e d a lic e ns e
numb e r b> th e Board x\hich shall b e shoxxn on th e
xsritten pr e scription.
(3-) fte — phxsician — assi s tant — has rec e ixed — from th e
s up e rxising — phxsician — written — instructions — fer
pr es cribing drugs and a xvrirten policx for p e riodic
r e xi e w bx th e phxsician of th e drugs pr e scrib e d.
(^4 fn — ord e r to compound and disp e ns e drugs, th e
Phxsician j\ssistant must obtain approxal from th e
Board of Pharmacx an d must carrx out th e functions
of compounding and disp e nsing in accordanc e xx ith
21 NCAC 4 6 .1700.
f+l In ord e r to pr e scrib e controlled substanc e s, th e
primarx sup e rvising phxsician and th e phxsician
assistant must sign th e stat e m e nt that th e x hav e r e ad
and und e rstand t+w BfiA MID LEVEL
PR.'\CT1T10NERS MANUAL and the information
sh ee t prox id e d b> the Board. Th e Board also stronglx
sugg e st s that th e phxsician and phxsician assistant
continu e to updat e their knoxx l e dg e of th e indication s
for th e s e substances and th e ir abus e pot e ntials. .Ml
pr e scriptions — fer — substanc e s — fa l ling — within — the
categori e s 2. 2N. 3 and 3N shall not e xc ee d a
l e gitimat e s e x e n dax supplx.
{%-) Th e phxsician assistant shall complx xxith other
r e l e x-ant laxvs and r e gulations.
f64 A pr e scription issu e d b> a phxsician assistant shall
displax the nam e and t e lephone number oi the
r e sponsibl e — sup e rxising — phxsicians — (primarx — er
back up): th e nam e , practic e address, t e l e phon e
number, and pr e scribing numb e r of the phxsician
assistant, as w e ll a s all information r e quir e d bx lax\.
{1^ Phxsician assistants max r e qu e st, r e c e ix e . and sign for
prof e ssional sampl e s and max distribute professional
sampl e s to pati e nts complying xvith appropriat e
f e d e ral and state r e gulations.
Authority G.S. 90-18(13): 90-18.1: 90-1' 1.23(14): 58 Fed Reg.
3l.rii'l993) (to be codified at 2 1 C.F.R. 1301).
.0008 SCOPE OF PRACTICE
Phxsician assi s tants p e rfomi m e dical acts, tasks or functions
.0010 SUPERVISION OF PH'^ SICIAN .ASSISTANTS
.\ physician assistant max p e rform m e dical acts, tasks, or
xvith phy.ician sup e rxision. Phxsician assistants p e rfomi those functions onix und e r th e sup e rx isi on of a phxsician. Sup e rxision
duti e s and r es ponsibiliti e s. — including th e pr e scribing and shall b e continuous but. e xc e pt as othenxis e prox ided in th e s e
di s pen s ing of drugs and m e dical d e xic e s. that are delegated bx rul e s, shall not b e constru e d as r e quiring th e phxsical pr ese nc e
of th e s up e rxising phxsician at th e tim e and place that the
s o rx ic e s ar e r e nd e r e d.
th e ir sup e rxising phxsician! s). — Phx s ician as s istant s shall b e
consid e r e d th e ag e nts of th e ir sup e rxising phxsicians in th e
performanc e of all m e dical practic e r e lat e d actixiti e s. including
but not limit e d to. the ordering of diagnostic, th e rap e utic and
oth e r m e dical s e r < ices.
Authority G.S. 90-18(13): 90-18.1.
It is th e obligation of e ach t e am of ph>sician(s) and phxsician
a s5 i s tant( s ) to e nsure that th e phxsician assistant's s cop e of
id e ntified: that d e l e aat i
jf m e dical task '
practic e
appropriat e to th e skills of th e sup e rxising ph>sician(s) as xx e ll
as th e phxsician as s istant's l e x e l of comp e t e nc e : that the
r e lation s hip of. and acc e ss to. e ach superxi s ing phxsician i s
718
.\ORTH CAROLIXA REGISTER
October 15. 1998
13:8
PROPOSED RULES
d o Finod: and that a proc e ss for evaluation of th e physician
assistant's perfonnanc e is e stablish e d. — A stat e m e nt cl e arly
.0012 NOTIFICATION OF INTENT TO PRACTICE
(a) Prior to the p e rformanc e of any medical acts, tasks, or
describing th e s e supervisor}' arrang e m e nt s in a l l sett i ngs must be functions, a phy s ic i an assistant approv e d by th e Board sha l l
signed b\ each s upervising phy s ician and the physic i an a s si s tant submit notification of such int e nt on fonns provid e d by th e
and sha ll b e k e pt on ti le at all practice sit e s. — This stat e m e nt Board. Th e phy s ician assi s tant applicant may b e provi s ionally
describing — sup e rvisor\' — arrangem e nts — artd — in s tructions — fer approv e d by th e Board's administrativ e staff to b e gin p e rforming
pr e scriptiv e authority shall be ava i labl e upon r e qu e st by th e m e dical acts, tasks, and functions upon r e c e ipt of th e applicat i on
Board or its r e pr e s e ntativ e s.
The time int e rval betwe e n th e physician a s sistant's contact
with th e pati e nt and the chart r e vi e w and countersigning b\ the
sup e rvising phy s ician may b e a ma.ximum of seven days for
outpat ie nt (clinic'offic e ) charts. Entri e s b\ a physician a s si s tant
into pati e nt charts of inpati e nt s (hospital, long t e rm car e
institutions) must comply with th e rul es and r e gulat i on s of the
institution: but. at a minimum, th e i nitial work up and treatm e nt
plan and th e discharg e summar>' must be countersigned by th e
superv i sing ph\ si c i an within — s e v e n day s of th e tim e of
gen e ration of th e s e not e s. — In th e acute inpatient s e tting, th e
initial work up. ord e rs, and tr e atm e nt plan must b e signed and
dat e d within two working davs.
fonn in the Board's office subject to tlna l approval by th e Board.
Such notification shall includ e :
(4^ — the nam e , pract i c e addr e ss, and telephon e numb e r of
th e physician assistant: and
(34 th e nam e , practic e addr e ss, and t e l e phone number of
th e primar\ sup e rvis i ng physician(s).
(-b) — The physician assistant shall notil\' th e Board of any
chang e s or additions in a pr e viously approv e d practice s e tting
w i thin 1.^ days of th e occurr e nc e .
fe) — Int e nt to pract i c e fonns mu s t b e submitted for e ach
additional job und e r a n e w primary sup e rvising phy s ician.
Aiithorin-G.S. 90-18(13): 90-18.1.
.Aiahorin-G.S. 90-18(13): 90-18.1.
.0011 SUPERVISING PHYSICIANS
(a) A physician wi s hing to s e rve as a primarv' sup e rvising
phvsician must:
i4-) b e lic e ns e d to practic e m e dicin e by th e Board and not
prohibited by th e Board from sup e rvising ph\ s ician
assistant:
{3r) not i fi th e Board of the physician's int e nt to s e rv e as a
primary — supervising — physician — fef — a — physician
assi s tant: and.
{^ — submit a stat e m e nt to th e Board that th e physician will
e x e rci se sup e rvi s ion ov e r th e physician assistant in
accordanc e with any rul es adopt e d by th e Board and
that th e physician will r e tain prof e ssional and l e gal
r es ponsibility for th e car e r e nd e r e d by th e physician
as s istant.
.0013 SATELLITE SETTINGS
Nothing contained in this Subchapt e r shall b e con s tru e d to
prohibit th e r e nd e ring of s e rvic es by a physician assi s tant in a
se tting g e ographically remote from the supervising phy s ician.
.Authority G.S. 90-18(13): 90-18.1.
.0014 EXCLUSIONS OF LIMITATIONS ON
EMPLOYMENT
Ne. :hing h e r e in sha l l b e constru e d to limit any lawful
eff>f i oym e nt arrang e ment of a physician assistant approved
und e r this Subchapt e r .
.AiilhoritrG.S. 90-18(13): 90-18.1.
.0015 ASSUMPTION OF PROFESSIONAL LIABILITY
Th e sup e rvising physician( s ) shall b e r e sponsibl e for th e
(b) A phy s ician wishing to s e rv e as a back up sup e rvising sup e rvision of th e physician as s istant's pati e nt car e activiti e s.
i ncluding wh e n th e physician a s sistant provid es car e and
treatm e nt for pati e nts who ar e in h e alth car e faciliti e s.
physician must b e l i c e ns e d to practic e m e dicin e by the Board
and not prohibit e d b> th e Board from s up e rvi s ing a phvsician
as s i s tant and approv e d by th e pr i mary' sup e rv i sing phy s ician a s
a p e rson w illing and qualifi e d to assume r e spon s ibilitv for th e .4uthorir\- G.S. 90-18(13): 90-18.1.
car e r e nd e r e d by th e physician assistant in th e abs e nc e of th e
priman, sup e rvising physician. An ongoing list of all approv e d
back up sup e rvising ph\ sicians. signed and dat e d by e ach back
up sup e rvising physician, th e primary sup e rvising physician, and accordanc e with provi s ions of Articl e 3 A of G.S. 150B.
.0016 VIOLATIONS
Th e Board ma\. following th e e x e rcis e of due proc e ss, in
th e physician a s sistant, must be retained as part of th e disciplin e any phy s ic i an assistant who:
insp e ctabl e s up e rvi s or} arrangements statement d es crib e d in
Rule .0010 of this Subchapt e r.
(c) It is the responsibility of th e supervising physician s to
e nsure that th e physic i an as s istant has ad e quat e back up for any
proc e dur e p e rform e d by th e physician as s i s tant, in any practic e
location (oftlc e . hom e , hospita l , e tc.).
Authorit\G.S. 90-18(13): 90-18.1.
fl-) fraudul e ntiv or d e c e ptiv e ly obtains or attempts to
obtain a lic e ns e :
(34 fraudul e ntly or d e c e ptiv e ly u s es a license:
(54 i s convict e d of a f e lony:
(44 is an habitua l us e r of intoxicants or drugs to such an
e xt e nt that th e phy s ician as s istant i s unabl e to saf e ly
p e rfonn m e dical acts:
(^4 ha s b ee n adjudicat e d as m e ntally incomp e t e nt or has
a m e ntal condition that r e nd e r s th e physician a ss istant
13:H
NORTH CAROLINA REGISTER
October 15, 1998
719
PROPOSED RULES
unable to saf e ly p e rform medical acts;
{^ has committ e d an act of m o ral turpitud e :
f7^ r e pr e s e nts hims e lf or h e r se lf a s a physician;
Phy s ician assistants approv e d und e r this Subchapt e r shall k ee p
proof of curr e nt approval available for insp e ction at their
primarv plac e of practic e and shall, wh e n e ngag e d in their
f8^ any v i olation of the F e deral Controll e d Substanc e s prof e ss i onal activiti e s, w e ar a nam e tag id e ntifying th e ms e lv es
law; or
{^ lacks professional compet e nce to p e rform m e dical
act s with a reasonabl e d e gre e of skill and safety for
pati e nt s . In this con ne ctio n , t he Board may consid e r
action of a physician a s si s tant indicating failur e to
prop e rK — treat — a pati e nt — and — may — r e quir e — s«eh
phys i cian — assistant — te — submit — te — inquiri e s — er
e xam i nations, writt e n or ora l . b\ m e mb e r s of the
Board or by oth e rs lic e ns e d to practic e in this State, a s
the — Board — d ee m s — nec e s s aiA — te — d e t e nn i n e — the
prof ess ional qualifications of such phvsician assistant.
AiiihoniyG.S. 90-NiuitUi: 9()-lSil3): 9U-1H.I.
.0017 DISCIPLINARY AUTHORITY
Th e Board, upon finding that a phys i cian assistant has
comm i tt e d — arrt — off e ns e d e scrib e d — ifi — Rtife — .0016 of thi s
Subchapt e r. ma> aft e r d ue p ro c ess:
f-H r e fus e to grant a l ic e n se : or
(^-) r e vok e , susp e nd, l i mit, or oth e rwis e r e strict a lic e n se .
Authority U.S. 9U-1-. 90-18(13): 90- lH. 1.
.0018 LOCUM TENENS PERMIT
Locum t e n e ns m e ans th e t e mporarv provision of s e rvic e s at a
sp e cific sit e by a substitut e physician ass i s tant provider. The
Board may grant a locum t e n e ns p e rm i t to any applicant who is
approv e d by th e Stat e . — Th e p e nnit may b e grant e d b\ an
authoriz e d r e pr e s e ntativ e of th e Board. Such application s for
locum t e n e ns p e rmi ts shall b e r e vi e w e d at th e n e xt r e gLilarly
sch e dul e d Board m ee t i ng. — Th e duration of a locum t e nens
p e nnit sha l l b e finit e and shall not e xceed six months.
Authority U.S. 90-1 Sf 13): 90-lH.l.
.0019 TITLE AND PRACTICE PROTECTION
fa-) — Any p e rson not approv e d under this Sub> ipl e r is in
violation of G.S. 90 18 and is subject to p e nalties app l icabl e to
th e unlic e n se d practic e of m e dicin e if h e or s h e :
f-M ho l ds h i ms el f or h e rs e lf out a s a phy s ician a s si s tant;
(3-) us e s any combination or abbr e viation of th e t e rm
"physician ass i stant" to indicat e or impK that h e or
sh e is a ph\sician assistant; or
(^-) acts as a phy s ician as s i s tant without being approv e d
by th e Board.
(b) An unlicen se d phy s ician shall not be permitt e d to us e th e
tit le of "physician as s istant" or to practic e as a physician
assistant unl e s s h e or s he fulfills th e r e qu i r e m e nt s of this
Subchapt e r.
as a "phy s ician a s sistant."
Authority G.S. 90-18(13): 90-lS.l.
.0021 FEES
Th e Board is e mpowered to charge th e following f ees :
f+^ Physician Ass i stant Lic e ns e F ee on e hundr e d and
fiftv do ll ars ($150.00).
f=^ Annual — R e gistrat i on — Fee s e v e nty five — dollars
($75.00).
Authorities. 9()-lS(l3): 90-IS 1.
SUBCHAPTER 32R - CONTINUING MEDICAL
EDUCATION (CME) REQUIREMENTS
.0001 CONTINUING MEDICAL EDUCATION (CME)
REQUIRED
(a) CME js defined as knowledge and skills generally
recognized and accepted by the profession as within the basic
medical sciences, the discipline of clinical medicine, and the
provision of healthcare to the public. CME should maintain,
develop, or improve the physician's knowledge, skills-
professional performance and relationships w hich ph\ sicians use
to provide services for their patients, their practice, the public,
or the profession.
(b) Each person licensed to practice medicine in the State of
North Carolina shall complete no less than 50 hours of practice
relevant CME annually m order to enhance current medical
competence, performance or patient care outcome. 20 hours
shall be in the phvsician-initiated category and 30 hours shall be
in the educational provider-initiated category. General medical
reading is not applicable to phvsician-initiated CME.
Authority G.S 90-14(al( 15).
.0002 APPROVED CATEGORIES OF CME
(a) Phvsician-initiated CME:
( 1 ) Practice based self-studv;
ill
tu
ill
16}
ill
iM
(10)
LUQ
Colleague consultations;
Office based outcomes research;
Study initiated bv patient inquiries:
Study of community health problems:
Successful specialty board examination
certification or recertification;
Teaching (professional, patient/public health);
Mentoring:
Morbidity and Mortalits (M&M) conference:
■loumal clubs;
for
Authority G.S. 90-18(13): 90-IS. 1.
.0020 IDENTIFICATION REQUIREMENTS
Creation of generic patient care pathy\ays and
guidelines:
( 12) Competency Assessment ,
(b) Educational Provider-Initiated CME: All education
720
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
offered by institutions or organizations accredited by the
Accreditation Council for Continuing Medical Education
(ACCME) and reciprocating organizations or American
Osteopathic Association ( AOA).
( 1) Formal Courses:
(2) Scientific clinical presentations, or publications;
(3) Enduring material (Audio-Video):
(4) Skill development.
Authorin- G.S. 90-14(0)115).
.0003 EXCEPTIONS
(a) A licensee currently enrolled in an AOA or Accreditation
Council on Graduate Medical Education (ACGME) accredited
graduate medical education program is exempt from the
requirements of Rule .0001 of this Subchapter.
(b) A licensee shall ha\e one \ear of e.xemption from the
requirements of Rule .0001 of this Subchapter after having
received initial licensure.
Authorin- G.S. 9U-I4ta/(15j.
.0004 REPORTING
At tlie time of annual registration each Licensee shall report
on the Board's annual registration form the number of hours of
practice-relevant CME obtained in compliance with Rule .0001
of this Subchapter. CME hours must be documented by
categories for three consecutive \'ears and may be inspected by
the Board or its agents.
Authorin- G.S. 90-l4(a)( 15).
SUBCHAPTER 32S - PHYSICIAN ASSISTANT
REGULATIONS
.0001 DEFINITIONS
The following definitions appK to this Subchapter:
( 1 ) "Board" means the North Carolina Medical Board.
(2) "Physician Assistant" means a person licensed b\ and
registered with the Board to perform medical acts,
tasks, or functions under the supervision of a
physician licensed by the Board, who performs tasks
traditionally performed by the phy sician. and who has
graduated from a physician assistant or surgeon
assistant program accredited by thie Commission on
Accreditation of Allied Health Education Programs.
or its predecessor or successor agencies.
(3) "Physician Assistant License" means the document
issued by the Board showing approval for the
physician assistant to perform medical acts, tasks, or
functions under North Carolina law.
(4) "Registering" means paying the annual fee and
providing the information requested by the Board as
outlined in Rule .0005 of this Subchapter.
(5) "Supervising Physician" means a physician who is
licensed by the Board and yvho is not prohibited by
the Board ft-om supervising physician assistants. The
m
m
£8}
physician may serve as a primary supervising
physician or as a back-' ip supervising physician.
(a) The "Primary Supervising Physician" is the
physician yvho. by signing the application to
the Board, accepts full responsibility for the
physician assistant's medical activities and
professional conduct at ail times, whether the
physician personally is providing supervision
or the supervision is being provided by a Back-
up Supervising Physician. The Primary
Supervising Physician shall assume total
responsibility for assuring the Board that the
physician assistant is qualified by education
and training to perform all medical acts
required of tlie physician assistant and shall
assume total responsibility for the physician
assistant's perfonnance in thie particular field
or fields io y\hich the physician assistant is
expected to perfonn medical acts.
(b) The "Back-up Super\ising Physician" means
the physician who, by signing the statement
required rn Rule .0010 of this Subchapter,
accepts the responsibility for supervision of the
physician assistant's activities in thie absence of
the Primary Supery ising Physician. The Back-
up Supervising Phy sician is responsible for the
activities of the physician assistant only when
providing supervision.
"Supervising" means overseeing the activities of. and
accepting the responsibility for, the medical services
rendered by a physiciar assistant.
"Volunteer practice" rieans perfonnance of medical
acts, tasks, or functions ysithout expectation of any
form of payment or compensation.
" Examination" means the Physician Assistant
National Certil\ing Examination or another
examination as approved by the Board.
.Authority- G.S 90-18/13): 90-18. 1.
.0002 QUALIFICATIONS FOR LICENSE
Except as otherwise provided in this Subchapter, an individual
shall obtain a license from the Board before the individual mav
practice as a phy sician assistant. The Board may grant a license
as a physician assistant to an applicant who has met aH the
following criteria:
ill
0}
submits a completed application on forms provided by
the Board:
pays thie fee established by Rule .0021(1 ) in this
Subchapter:
has successfully completed an educational program
for physician assistants or surgeon assistants
accredited by tlie Commission on Accreditation of
Allied Health Education Programs or its predecessor
or successor agencies and: if licensed in North
Carolina after June _L 19Q4. has successfully
completed a licensing examination approved by the
13:8
NORTH CAROLINA REGISTER
October 15, 1998
721
PROPOSED RULES
Board:
(4) certifies that he or she is mentall\ and ph\sicalK able
to engage sat'eK in practice as a ph\sician assistant:
(5) has no license, certitlcate. or registration as a
phNsician assistant currentK under discipline-
res ocation. suspension or probation for cause
resulting from the applicant's practice as a ph\sician
assistant:
(6) has good moral character: and
(7) submits to the Board an\ other information the Board
deems necessar\ to e\aluate the applicant's
qualifications: and
(8) jf two \ears or more ha\e passed since graduation
from an approv ed program, the applicant must submit
documentation of the completion ot'at least 100 hours
of continuing medication education (CME) during the
preceding two \ears.
Auihorin-G.S. 90-11: 90-1^1 13i: 90-18.1.
.0003 TEMPORARY LICENSE
(a) During the \ear prior to 2002. the Board ma\ grant a
temporar\ license, \alid for a period not to exceed one \ ear, to
an applicant who meet the qualifications for a license except that
the appl'cant has not \et passed a licensing examination
approNCG \ the Board. The Board shall not grant a temporarx
license to an applicant who has t\\ ice failed a licensing
examination approved tn the Board.
(b| .\ temporary license becomes \oid at the time the Board
grants the ph\sician assistant a fuH license or at the expiration
date shown on the temporary license.
(c) A temporan. license shall expire 30 da\s after the
ph\sician assistant receives notice of non-passing scores on the
second attempt of taking a licensing examination approved by
the Board or at the expiration date of the temporary license,
whichever is sooner. The licensee must notifx the Board w ithin
15 davs upon the receipt of scores.
AurhorlnG.S. 90-1 8(1 3i: 90-18.1.
.0004 INACTIVE LICENSE STATUS
By notifi, ing the Board in writing anv physician assistant may-
elect to place his or her license on an inactive status. A
physician assistant v\ith an inactive license shall not practice as
a physician assistant. Any phv sician assistant who engages jn
practice while his or her license js on inactive status shall be
considered to be practicing without a license, which shall be
grounds for discipline under G.S. 90- 14(a)(7). A physician
assistant requesting reactivation from inactive status shall be
required to pav the current renewal fee, to provide
documentation to the Board veri1\ing completion of continuing
medical education during the preceding ty\o vears as required in
Rule .0006 of this Subchapter, and shall be required to meet the
criteria for renewal as specified in 21 NCAC 32S .0005.
AuthorinG.S. 90-18(13): 90-18.1.
.0005 ANNUAL REGISTRATION
Each person vsho holds a license as a physician assistant jn
this state shall, upon notification from the Board, annually
register the license at such time as directed by the Board by:
( 1 ) completing the Board's registration form: and
prov iding any other infonnation required by the
Board: and
12J
submitting the fee required [n Rule .0017 of this
Subchapter.
AuthorinG.S. 90-15: 90-18(13): 90-18.1.
.0006 CONTINUING MEDICAL EDUCATION
jn order to maintain physician assistant licensure,
documentation must be maintained by the phv sician assistant of
100 hours of continuing medical education (CME) completed for
every two year period, at least 40 hours of which must be
American Academy of Phv sician .Assistants Category i CME or
the equivalent. CME documentation must be available for
inspection by the Board or an agent ot' the Board upon request.
Anv physician assistant who prescribes controlled substances
shall complete at least three hours of CME every two years on
the medical and social effects of the misuse and abuse of
alcohol, nicotine, prescription drugs (including controlled
substances), and illicit drugs.
AiiihorinG.S. 90-18(13): 90-18.1.
.0007 E.XEMPTION FROM LICENSE
Nothing in this Subchapter shall be construed to require
licensure under 2 1 NCAC 32S of:
( 1 ) a physician assistant student enrolled in a phv sician
assistant or surgeon assistant educational program
accredited by the Commission on .Accreditation of
.Allied Health Education Programs or its successor
organizations: or
(2) a physician assistant employed in the service of the
federal government while performing duties incident
to that employment: or
(3) agents or employees of phvsicians who perform
delegated tasks rn the office of a phv sician but who
are not rendering services as a phv sician assistant or
identifying themselv es as a phv sician assistant.
AuthorinG.S. 90-18(13): 90-18.1.
.0008 SCOPE OF PRACTICE
(a) Physician assistants perform medical acts, tasks or
functions with physician supervision. Phvsician assistants
perfomi those duties and responsibilities, including the
prescribing and dispensing of drugs and medical devices, that are
delegated bv their supervising phvsician(s).
(b) Physician assistants shall be considered the agents of their
supervising phvsicians in the performance of aj] medical
practice-related activities, including but not limited to. the
ordering of diagnostic, therapeutic and other medical services.
722
NORTH CAR0LIS.4. REGISTER
October 15, 1998
13:8
PROPOSED RULES
m
14]
\
Aiilhorin- G.S. 90-181 1 3): 90-18. 1.
.0009 PRESCRIPTIVE AUTHORITY
A ph\sician assistant js authorized to prescribe, order,
procure, dispense and administer drugs and medical devices
subject to the following conditions:
( 1) The physician assistant and the supervising
physician(s) shall acknowledge that each js familiar
with the laws and rules regarding prescribing and
shall agree to comply with these laws and rules by
incorporating the laws and rules into the written
prescribing instructions required for each approved
practice site; and
(2) The ph\sician assistant has received from the
supervising physician written instructions for
prescribing, ordering, and administering drugs and
medical devices and a written policy for periodic
review by the physician ot" these instructions and
policN ; and
in order to compound and dispense drugs, the
ph\sician assistant must obtain approval from the
Board of Pharmacy and must carry out the functions
of compounding and dispensing b\ current Board of
Pharmacy rules and an\ applicable federal guidelines:
and
in order to prescribe controlled substances, both the
physician assistant and the supervising ph\ sician must
have a valid PEA registration and the physician
assistant shall prescribe in accordance with
information provided by the Medical Board and the
PEA. All prescriptions for substances falling within
schedules IL UN. Ill, and IIIN. as defined in the
federal Controlled Substances Act, shall not exceed a
legitimate 30 da\ suppK : and
Each prescription issued bv the ph\sician assistant
shall contain, in addition to other information required
by law, the following:
(a) the physician assistant's name, practice
address, telephone number: and
(b) the physician's assistant's license number and.
if applicable, the physician assistant's PEA
number for controlled substances prescription;
and
(c) the responsible supervising physician's
(primary or back-up) name and telephone
number; and
Pocumentation of each prescription must be noted on
the patient's record and must include the folloyving
infonnation:
(a) medication name and dosage, amount
prescribed, directions for use, number of
refills; and
physician
ill
i6J
lb]
m
signature of physician assistant y\ith
supervising physician's co-signature according
to the site specific rule in 2 1 NC AC 32S .00 1 0.
Physician Assistants who request, receive, and
dispense professional medication samples to patients
must comply yvith all applicable state and federal
regulations.
Aiilhorin- G.S. 90-18(13): 90-18.1: 90-171.23(14): 58 Fed. Reg.
31.171(1993) (10 be codified at 21 C.F.R. 1301).
.0010 SUPERVISION OF PHYSICIAN ASSISTANTS
A physician assistant may perfonn medical acts, tasks, or
functions only under the supervision of a physician. Supervision
shall be continuous but, except as otherwise provided in these
Rules, shall not be construed as requiring the physical presence
of the supervising physician at the time and place that the
services are rendered.
il is the obligation of each team of physician(s) and physician
assistant(s) to ensure that the physician assistant's scope of
practice is identified; that delegation of medical tasks is
appropriate to the skills of the supervising physician(s) as well
as the physician assistant's level of competence; that the
relationship of, and access to. each supervising physician is
defined; and that a process for evaluation of the physician
assistant's performance is established. A statement clearly
describing these supervisoi"y arrangements in all settings must be
signed bv each supervising physician and the physician assistant
and shall be kept on file at aii practice sites. This statement
describing supervisory arrangements and instructions for
prescriptive authority shall be available upon request by the
Board or its representatives.
The time interval between the physician assistant's contact
with the pati.nt and the chart review and countersigning by the
supervising physician may be a maximum of seven days for
outpatient (clinic/office) charts. Entries by a physician assistan '
into patient charts of in patients (hospital, long temi ca'e
institutions) must comply with the rules and regulations of the
institution; but, at a minimum, the initial yvork u p and treatment
plan and the discharge summary must be countersigned by the
supervising physician yvithin seven days of the time of
generation ot' these notes, in the acute inpatient setting, the
initial y\ork-up, orders, and treatment plan must be signed and
dated yvithin tyvo yvorking days.
Aiilhori!}- G.S. 90-18(13): 90-18.1.
.0011 SUPERVISING PHYSICIANS
(a) A physician wishing to serve as a primary supervising
physician must:
( 1 ) notify the Board of the physician's intent to serve as
a primary supervising physician for a physician
assistant; and
(2) submit a statement to the Board that the physician is
willing and qualified to exercise supervision of the
physician assistant in accordance with rules adopted
by the Board and that the physician will retain
professional responsibility for the care rendered by
the physician assistant within the scope of' the
supervisory arrangements established pursuant to Rule
.0010 of this Subchapter.
(b) A physician wishin g to serve as a back-up supervising
J3:8
NORTH CAROLINA REGISTER
October 15, 1998
723
PROPOSED RULES
physician must be licensed to practice medicine b^; the Board
and not prohibited by the Board from supervising a ph\sician
assistant and be approved b\ the primar\ supervising physician
as a person willina and quahfied to assume responsibiHtv for the
care rendered by the ph\sician assistant rn the absence of the
priman. supervising; ph\sician. An on^oina list of aJJ approved
back-up supervising ph\sicians. sianed and dated b\ each back-
u p supervising physician, the primary supervisini; physician, and
the physician assistant, must be retained as part of the
inspectable supervisory arrangements statement described [n
Rule .0010 of this Subchapter.
tcj i! is the responsibility of the supervising physicians to
ensure that the ph\sician assistant has adequate back-up for any
procedure performed b\ the physician assistant in an\ practice
location (office, home, hospital, etc.).
AiilhorityG.S. 9()-IHil3): 9()-lS.L
.0012 NOTIFICATION OF INTENT TO PRACTICE
(a) Prior to the performance of an\ medical acts, tasks, or
functions under the supervision of any primary supervising
ph\sician. a ph\sician assistant licensed by the Board shall
submit notification of such intent on forms pro\ided by the
Board. The ph\sician assistant shall not commence practice
until acknowledgment ot' the notification of intent to practice
form ]s received from the Board. Such notification of intent to
practice shall include:
( 1 ) the name, practice addresses, and telephone number
of the physician assistant; and
(2) the name, practice addresses, and telephone number
of the priman supervising ph\sician(s).
(b) The ph\sician assistant shall notify the Board of anv
changes or additions m a previousK approved practice setting
within 15 days of the occurrence.
AiithorinG.S. 90-l4ia)( 1 1 }: 90-1 Hi 13): 90-18.1.
.0013 VIOLATIONS
(a) The Board may deny, annul, suspend, or revoke the
license, or other authorit\ to function as a ph\sician assistant in
this State, of an\ person who has been found by the Board to
have committed any of the following acts of misconduct or
violations, or for an\ of the following reasons:
( I ) Immoral, dishonorable, or unethical conduct;
Failure to function in accordance with the rules of this
Q
I3j
ill
Subchapter or with the applicable laws of the State of
North Carolina governing physician assistants;
Making false statements or representations to the
Board, or willfulK concealing from the Board
material information in connection with an application
for a license or notification of intent to practice as a
physician assistant;
Representing oneself as a physician;
Being unable to function as a ph\ sician assistant w ith
reasonable skill and safety to patients by reason of
illness, drunkenness. e\cessi\e use of alcohol, drugs,
chemicals, or any other type of material, or by reason
of any physical or mental abnonnality. The Board
ma\ require a licensed physician assistant to submit to
a mental or physical examination by physicians
designated by the Board before or after charges ma\
be presented against the physician assistant. The
results ot" the examination shall be admissible jn
evidence in a hearing before the Board;
(6) Any departure from, or the failure to conform to. the
standards of acceptable and preyailing medical
practice, irrespective of whether or not a patient js
injured thereby, or the committing of any act contrary
to honesty, justice, or good morals, w hether the same
is committed in the course of practice or otheryvise
and yvhether committed yyjthin or yvithout North
Carolina;
(7) Conviction in any court of a crime involving moral
turpitude, or tfie violation of a jaw involving the
practice of medicine or practice as a physician
assistant, or a conviction of a felony;
(8) By false representations has obtained or attempted to
obtain professional practice as a physician assistant,
money, or anything of yalue;
(9) Has advertised or publicly professed to treat human
ailments under a system or school of treatment or
practice other than that for y\hich the physician
assistant has been educated;
( 10) Adjudication of mental incompetency;
(11) Lack of professional competence to practice as a
physician assistant y\ith a reasonable degree ot" skill
and safety for patients. The Board ma\. upon
reasonable grounds, require a physician assistant to
submit to inquiries or examinations, ysritten or oral, by
members of the Board, physician assistants, or
physicians licensed to practice medicine, as the Board
deems necessary to determine the qualifications of
such license;
(12) Promotion of the sale of drugs, devices, appliances or
goods for a patient, or proy iding sery ices to a patient.
in such a manner as to exploit the patient and or the
entity providin g compensation to the physician
assistant or the employer of the physician assistant on
behalf of the patient;
(13) Having a license or other authority to practice as a
phy sician assistant revoked, suspended, restricted, or
acted against, or having a license denied by a
licensing authority of an\ jurisdiction. For p ur poses
of this Subchapter, any other licensing authority's
acceptance of a license or other authority to practice
which yvas voluntarily relinquished or surrendered by
a physician assistant is considered an action against a
license or the authority to practice as a physician
assistant;
( 14) The failure to respond, w ithin a reasonable period of
time and in a reasonable manner, as determined by the
Board, to inquiries from the Board concerning any
matter affecting the license or practice of the
physician assistant.
724
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
Authorin- G.S. 90-14: 90-14.2.
.0014 DISCIPLINARY AUTHORITY
(a) For any of the foregoing reasons, the Board may deny the
issuance of a license to an applicant. ma\ re\oke a license issued
to the ph\ sician assistant. ma\ suspend such a license for a
period of time, and ma\ impose conditions upon the continued
practice of the ph\ sician assistant.
(b) The Board ma\ also, after such period of suspension as
the Board ma\ deem advisable, limit the ph\sician assistant's
practice w ith respect to the scope or location of his her practice.
The Board ma\. [n its discretion and upon such terms and
conditions and for such period of time as it may prescribe,
restore a license so revolted or rescinded.
(c) The Board shall refer to the North Carolina Academ\ of
Ph\sician Assistants Health Committee all phxsician assistants
whose health and effectiveness have been significantly i mpaired.
.Authorin- G.S. 90-1 4la)t III: 90-18(13): 90-18.1.
.0015 TITLE AND PRACTICE PROTECTION
(a) Any person not approved under this Subchapter is in
violation of G.S. 90-18 and is subject to penalties applicable to
the unlicensed practice of medicine if he or she:
( 1 ) falsely identities himself or herself as a physician
assistant:
(2) use any combination or abbreviation of the term
"physician assistant" to indicate or imply that lie or
she is a physician assistant: or
(3) acts as a phv sician assistant without being approved
by the Board.
(b) An unlicensed physician shall not be permitted to use the
title of "physician assistant" or to practice as a physician
assistant unless tie or shie fulfills the requirements of this
Subchapter
.Authorin- G.S. 90-18(13): 90-18.1.
G.S. 90-12. 1 or who submits a statement to the Board
contlrming that the physician assistant is cun'entlv
exclusively engaged in volunteer practice and has
engaged exclusively in volunteer practice during the
preceding y ear shall submit a reduced registration fee
of twenty-five dollars ($25.00).
.Authority G.S. 90-18(13): 90-18.1.
.0018 PRACTICE DURING A DISASTER
A phv sician assistant licensed in this State or in any other state
is authorized to perform acts, tasks, or functions as a phv sician
assistant under the superyision of a physician licensed to practice
medicine in North Carolina during a disaster within a county in
which a state of disaster has been declared or counties
contiguous to a county in which a state of disaster has been
declared (in accordance with G.S. 166A-4(3) or G.S. 166A-6).
The physician assistant shall notify the Board in writing of the
names, practice locations, and telephone numbers for the
physician assistant and each primary supervising physician
within 15 days ofthe tirst perfonnance of medical acts, tasks, or
functions as a physician assistant during the disaster. A team of
physician(s) and physician assistant(s) practicing pursuant to this
Rule shall not be required to maintain on-site documentation
describing supervisory arrangements and instructions for
prescriptive authority as otherwise required in Rules .0009 and
.0010 of this Subchapter.
.Authority- G.S. 166.A-4(3): GS 166.4-6.
CHAPTER 36 - BOARD OF NURSING
Notice is hereby given in accordance -with G.S. 150B-21.2
that the XC Board of Aursing intend.^ to antend rule cited
as 21 NCAC 36 .0227. Notice of Rule-making Proceedings was
published in the Register on September 2. 199~.
.0016 IDENTIFICATION REQUIREMENTS
A physician assistant licensed under this Subchapter shall
keep proof of current licensure and registration available for
inspection at the primary place of practice and shall, when
engaged in professional activities, wear a name tag identilMng
the licensee as a "physician assistant."
.Authority G.S 90-18(13): 90-18.1.
.0017 FEES
The Board requires the foliov\ ing fees:
( 1 ) Physician Assistant License Fee - one hundred and
fifty dollars (SI 50.00). except that an applicant for a
physician assistant limited volunteer license pursuant
to G.S. 90-12.1 need not submit an application fee.
(2) Annual Registration Fee ; seventy-five dollars
(S75.00). except that any physician assistant who
holds a limited volunteer license issued pursuant to
Proposed Effective Date: May 1. 1999
A Public Hearing will be conducted at 1 :00 p.m. on October
30. 1998 at the North Carolina Medical Board. 1201 Front
Street. Raleigh. NC..
Reason for Proposed Action: The Board of Nursing and North
Carolina Medical Board are recommending that a change be
made in the current rule to allow itiore flexibility in how
pliysician supervision ofthe nurse practioner's peiformance of
medical acts is implemetited and validated. We are also
recommending changes in the requriements for first-time
approval to practice as a nurse practitioner beginning January
1. 2000.
Comment Procedures: Comments regarding this action should
be directed to Jean H. St an lev. ARA Coordinator, North
13:8
NORTH CAROLINA REGISTER
October 15, 1998
725
PROPOSED RULES
Carolina Di>urd of Niirsinii. PO Box 2129. Raleiii/i NC 2''602-
2129. Comments must be received in the Board of Nursing
office by 4:30 p.m. on November 16, 1998.
Fiscal Note: These Rules do not affect the expenditures or
revenues of slate or local government finds. These Rules do not
have a substantial economic impact of at least five million
dollars I S5. 1 100. 0(11) j in a 1 2-inonth period.
SECTION .0200 - LICENSURE
.0227 APPROVAL AND PRACTICE PARAMETERS
FOR NURSE PRACTITIONERS
(a) Definitions:
( 1 ) "Medical Board" means the North Carolina Medical
Board.
(2) "Board of Nursing" means the Board of Nursing of
the State of North Carolina.
(3) "Joint Subcommittee" means the subcommittee
composed of members of the Board of Nursing and
Members of the Medical Board to whom
responsibility is given by G.S. 90-6 and G. S. 90-
171.23(b)( 14) to develop rules to govern the
perfonnance of medical acts by nurse practitioners in
North Carolina.
(4) "Nurse Practitioner or NP" means a currentl> licensed
registered nurse approved to perfonn medical acts
who function s nt th e dir e ction of or und e r th e
sup e rvision of under an agreement with a licensed
physician for onuoina supervision, consultation,
collaboration and e\aluation of the thos e medical aefe
acts perfomied. Only a registered nurse approved by
the Medical Board and the Board of Nursing may
legalK' identify oneself as a Nurse Practitioner. It is
understood that the nurse practitioner, by virtue of RN
licensure, is independenth accountable for those
nursing acts which he or she ma\ perform.
(5) "Nurse Practitioner Applicant" means a registered
nurse who ma\ function prior to full approval as a
Nurse Practitioner in accordance with Part (c)(2)(D)
of this Rule.
(6) "Supervision" means the physician's function of
overseeing medical acts performed b\ the nurse
practitioner.
(7) "Collaborati\e practice agreement" means the
arrangement for nurse practitioner-phvsician
continuous a\ailabilit> to each other for on-going
supervision, consultation, collaboration, refen'al and
evaluation of care pro\ided by the nurse practitioner.
(8) f^ "Primary supervising Phvsician" means the
licensed physician approved by the Medical Board
who. by signing the nurse practitioner application, is
held accountable for the on-going sup e rvision
supervision. consultation. collaboration and
evaluation of the medical acts perfomied b\ the nurse
practitioner as defined in the site specific written
protocols.
(A) The primary supervising physician shall
assume the responsibility of assuring the
Boards that the nurse practitioner is qualified
to perform those medical acts described in the
site specific written protocols.
(B) A physician m a graduate medical education
program, whether fully licensed or holding
onK a resident's training license, shall not be
named as a primars supervising phvsician.
(C) A phvsician in a graduate medical education
program who is also practicing jn a non-
training situation rnay supervise a nurse
practitioner in the non-training situation if fulK
licensed and approved to be a supervising
physician by the Medical Board.
(D) All physicians who may be a primary
supervising physician ot" nurse practitioner! s)
in any manner shall be approy ed in accordance
w ith this Rule.
(9) f8)"Back-up Supervising Physician" means the
licensed physician who. by signing an agreement w ith
the nurse practitioner and the primary supervising
physician(s) shall be held accountable for the
sup e rvising p e rformanc e supervision, consultation,
collaboration and evaluation of medical acts by the
nurse practitioner in accordance yvith the site specific
written protocols y\hen the Primary Superyising
Physician is not ay ailable.
(A) The signed and dated agreements for each
back-up supervising physician(s) shall be
maintained at each practice site.
(B) A physician jn a graduate medical education
program, whether fully licensed or holding
only a resident's training license, shall not be
named as a back-up super\ ising phvsician.
(C) A physician in a graduate medical education
program yvho js also practicing ]n a non-
training situation may be a back-up supervising
physician to a nurse practitioner in the non-
training situation jf fully licensed and has
signed an agreement w ith the nurse practitioner
and the priman. supervising physician.
( 10) (^"Approval" means authorization by the Medical
Board and the Board of Nursing for a registered nurse
to practice as a nurse practitioner in accordance v\ ith
this Subchapter.
(11) f44)" Written s tanding protocols" means the signed
and dated set of vsritten practice guidelines maintained
at each practice site which describe the prescribing
privileges, treatments, tests and procedures that define
the scope of the nurse practitioner's medical acts in
that setting. Clinical practice issues that are not
covered by the written protocols require nurse
practitioner ph\sician consultation. and
documentation related to the treatment plan.
(12) "Volunteer practice" means practice y\ithout
expectation of compensation or payment (monetary.
726
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
im
in kind or otherwise} to the nurse practitioner either
directJN or indirectly.
"Disaster" means a state of disaster as defined in
(14)
UIJ
North Carolina G.S. 166A-4(3) and proclaimed b\ the
Governor, or by the General Assembh pursuant to
North Carolina G.S. 166A-6.
"Interim Status" means the pri\ ilege that is given to a
new graduate of an appro\ed nurse practitioner
education program or a registered nurse seeking initial
approval in North Carolina w ith limited pri\ileges. as
detmed in Part (c)(2)(D> of thus Rule while awaiting
final approval to practice as a nurse practitioner.
"Temporar\ Approval" means authorization by the
Medical Board and the Board ot~ Nursing for a
registered nurse to practice as a nurse practitioner in
accordance with this Rule for a period not to exceed
18 months while awaiting notification of successful
completion of the national certification e.\amination.
(b) Scope of Practice. The nurse practitioner shall be
responsible and accountable for the continuous and
comprehensive management of a broad range of personal health
services for which the nurse practitioner shall be educationally
prepared and for which competenc\ has been maintained, w ith
ph\sician supervision and collaboration as described in
Paragraph (i) of this Rule. These services include but are not
restricted to:
( 1 ) promotion and maintenance of health;
(2) prevention of illness and disabilitv':
diagnosing, treating and managing acute and chronic
illnesses;
guidance and counseling for both individuals and
families;
prescribing, administering and dispensing therapeutic
measures, tests, procedures and drugs:
planning for situations be\ond the nurse practitioner's
expertise, and consulting w ith and referring to other
health care providers as appropriate; and
evaluating health outcomes.
(c) Nurse Practitioner Approval.
(I) Qualifications for nurse practitioner approval. A
registered nurse shall be approved b> the Medical
Board and the Board of Nursing Board before the
individual applicant mav practice as a nurse
practitioner. The Boards ma\ grant approval to
practice as a nurse practitioner to an ind i vidual
applicant who:
(A) is currently licensed as a registered nurse by
the Board of Nursing;
(B) has successfully completed an approved
educational program as outlined in Paragraph
(d) of this Rule; on as of January _L 2000.
meets the certification requirements set forth
Subparagraph (d)(3) of this Rule.
(C) has an unrestricted license to practice as a
registered nurse and. if applicable, an
unrestricted approval to practice as a nurse
practitioner unless the Boards consider such
(3)
(4)
(5)
(6)
(7)
condition and agree to approval;
(D) submits any information deemed necessarv' to
evaluate the application;
(E) has a collaborative practice agreement with a
priman. supervising physician — agr ee m e nt;
physician; and
(F) pays the appropriate fee.
(2) Application for nurse practitioner approval.
(A) Application for nurse practitioner approval
shall be made upon the appropriate forms and
shall be submitted Jointlv by the nurse
practitioner and primary supervising
physician(s).
(B) Applications for first-time approval in North
Carolina shall be submitted to the Board of
Nursing Board and then proc e ss e d approved bv
both Boards as follows;
(i) the Board of Nursing Board will veritv'
compliance with Parts (c)( 1 )(A) - (D) of
this Rule;
(ii) the Medical Board vsill verily'
compliance with Parts (c)( 1 )(D) - (F) of
this Rule; and
(iii) the appropriate Board will notify
applicant of final approval status.
(C) Applications for approval of changes in
practice arrangements for a nurse practitioner
currently approved to practice in North
Carolina:
(i) addition or change of primary
supervising physician shall be submitted
to the Medical Board;
(ii) request for change(s) in the scope of
practice shall be submitted to the
Nursing Board; Joint Subcommittee;
and
(iii) the appropriate Board will notify
applicant of final approval status.
(D) Interim status for nurse practitioner applicant
mavbe granted as follows:
(i) a registered nurse who is a new graduate
of an approved nurse practitioner
educational program as set forth in
Paragraph (d) of this Rule; or
(ii) a registered nurse seeking first time
approval to practice as a nurse
practitioner in North Carolina who has
worked previously as a nurse
practitioner in another state and who
meets the nurse practitioner educational
requirement as set forth in Paragraph (d)
of this Rule; and
(iii) the Boards Nursing Board has have
issued interim approval v\ith the
following limitations:
(1) no prescribing privileges;
(II) primary or back-up physicians
13:8
NORTH CAROLINA REGISTER
October 15, 1998
727
PROPOSED RULES
LlliJ
ph\ s ician — on sit e shall be
continuousK a\ailable for
appropriate ongoing super\ ision.
r e \ i e w consultation-
collaboration and countersigning
of notations of medical acts in all
patient charts within 2 4 hours
two working daNS of nurse
practitioner applicant-patient
contact: aftd
face-to-face consultation w ith the
primary super\ising ph\sician
shall be weekK with
documentation of consultation
consistent with Part (i)(4)(D) of
this Rule: and
ffH-> ma_\ not exceed period of six
months.
Januan. 1. 2000. first time
(IV)
(E) BeeinninL _
applicants who meet the qualifications for
appro\al. but are awaiting certitlcation from a
national credentialing bod\ approved bn the
Board of Nursing. ma\ be granted a temporarN"
approval to practice as a nurse practitioner.
Temporan approval is \alid for a period not to
exceed 18 months from the date temporary
approval ]s granted or until the results of the
applicant's certification examination are
available, whichever comes tlrst.
(F) ft) The registered nurse who v\as previousK
approved to practice as a nurse practitioner in
this state shall:
(i) meet the nurse practitioner approval
requirements as stipulated in Parts
(c)(l)(.^). (C) -(F) of this Paragraph;
(ii) complete the appropriate application;
(iii) receive notification of approval from the
appropriate Board. Board: and
(iv) meet the consultation requirements as
outlined m Parts (i)|4)(C) : iDj ot' this
Rule.
(G) fF) If for any reason a nurse practitioner
discontinues working m within the approved
sup e r\i5ion — ph\sician(5) nurse practitioner-
supervising ph\sician(s) arrangement, the
Boards shall be notified in v\riting and the
nurse practitioner's approval shall
automaticalK terminate or be placed on an
inactive status until such time as a new-
application is approved in accordance w ith this
Subchapter. Special consideration mav be
given in an emergency situation.
(H) Volunteer .Approval for Nurse Practitioners.
The Boards mav grant approval to practice in a
volunteer capacity to a nurse practitioner who
has met the qualifications as outlined jn Parts
(c)( IX A) - (F) and (2)(A) - (G) of this Rule.
(d) Requirements for Approval of Nurse Practitioner
Educational Programs.
(1) The Joint Subcommittee shall establish the
requirements for approval of nurse practitioner
education programs.
(2) .\ nurse practitioner applicant who completed a nurse
practitioner educational program prior to December
3 1. 1999 shall provide to the Board of Nursing
evidence of successful completion of a course of
formal education which contains a core curriculum
including 400 contact hours of didactic education and
400 contact hours of preceptorship or supervised
clinical experience.
(A) The core curriculum shall contain as a
minimum the follow ing components:
(i) health assessment and diagnostic
reasoning including:
(1) historical data:
(11) phv sical examination data;
(111) organization of data base;
(ii) phamiacology :
(iii) pathophysiology;
(iy ) clinical management of common health
care problems and diseases related to:
(!) respiratory system;
(11) cardiovascular system;
(III) gastrointestinal system;
(IV) genitourinary svstem;
(V) integumentary system;
(VI) hematologic and immune
systems:
(Vll) endocrine system;
(Vlll) musculoskeletal svstem:
(IX) infectious diseases;
(X) neryous system;
(XI) behavioral, mental health and
substance abuse problems:
(y) clinical preventative services including
health promotion and prevention of
disease;
(vi) client education related to Part s
(b)(1)(D) m4 (-E^ Subparts
(d)(2)(.A)(iv) and (v) of this Rule: and
(vii) role development including legal,
ethical, economical, health policy and
interdisciplinary collaboration issues.
(B) Nurse practitioner applicants v\ho mav be
exempt from components of the core
curriculum requirements listed in Subparagraph
(fe)(44 Part (d)(2)(A) of this Rule are:
(i) Any nurse practitioner approved in
North Carolina prior to January 18.
1981, is permanently exempt from the
core curriculum requirement,
(ii) A nurse practitioner certified bv a
national credentialing bodv approved b>
728
\ORTH CAROLISA REGISTER
October 15. 1998
13:8
PROPOSED RULES
►
►
the Nursing Board who also provides
evidence of satisfying Subparts
(b)(1)(A) (C) (d)(2)(A)(i) -(iii)ofthis
Rule shall be exempt from core
curriculum requirements in Subparts
(b)(1)(D) (G) (d)(2)(A)(iv) : (vn) of
this Rule. Evidence of satisfSing
Subparts (b)(1)(A) (C) (d)(2)(A)(i) -_
(iii) of this Rule shall include, but may
not be limited to:
(1) a narrative of course content; and
(II) contact hours.
(iii) A nurse practitioner seeking initial
approval after January 1 , 1998 shall be
exempt from the core cuiriculum
requirements if certified as a nurse
practitioner m hisher specialty by a
national credentialine bod\ approved by
the Board of Nursing as set forth in Part
(d)(2)(A) ot" this Rule and when initial
certification was obtained after January
1. 1998.
(iv) {m)\ nurse practitioner applicant.
whose formal education does not meet
all of the stipulations in Subparagraph
(d)(2) of this Rule, may appeal to the
Board of Nursing Joint Subcommittee
on the basis of other education and
experience.
(3) Instead of educational program approval, all nurse
practitioner r eplicants who are applying for or have
received, fi.'st time approval to practice as a nurse
practitioner on or after January _L 2000 shall be
certified by a national credentialing body approved by
the Board of Nursing or be ay\aiting initial
certification by a national credentialing body
approved bv the Board of Nursing for a period not to
exceed 18 months from date temporary approval is
granted.
(e) Annual Renewal.
(1) Each registered nurse yvho is approved as a nurse
practitioner in this state will, upon notification from
the Medical Board, annually' reneyv said approval by:
(A) Verifying current RN licensure;
(B) Submitting the fee required in Paragraph (I) of
this Rule; and
(C) Completing the renewal form.
(2) For the nurse practitioner w ho had first time approval
to practice after January K 2000. provide evidence of
certification or recertification by a national
credentialing body approved by the Board of Nursing.
(3) (3-) If the nurse practitioner has not renewed w ithin 30
days of renewal date, set by the Medical Board, the
approval to practice as a nurse practitioner will lapse.
(0 Continuing Education (CE). In order to maintain nurse
practitioner approval to practice beginning no sooner than tyvo
years after initial approval has been granted the nurse
practitioner shall earn 30 hours of continuing education every
two years. At least three hours of continuing education every
tyvo years shall be the study of the medical and social effects of
substance abuse including abuse of prescription drugs,
controlled substances, and illicit drugs. Continuing Education
hours are those hours for which approval has been granted by
the American Nurses Credentialing Center (ANCC) or
Accreditation Council on Continuing Medical Education
(ACCME) or other national credentialing bodies approved by
the Board of Nursing and consist e nt v\ i th Subpart (d)(2)(B)(i i )
of this Rul e . Nursing. Documentation shall be maintained b) the
nurse practitioner at each practice site and made available upon
request to either Board.
(g) Inactive Status.
( 1 ) An) nurse practitioner yvho wishes to place his or her
approval on an inactive status may notify the Boards
by completing the form supplied by the Boards;
(2) The registered nurse with inactive nurse practitioner
status shall not practice as a nurse practitioner;
(3) The registered nurse y\ ith inactive nurse practitioner
status who reapplies for approval to practice shall be
required to meet the qualifications for approval as
stipulated in Parts (c)( 1 )(A). (c)( 1 )(C) -^ (FJ and
Part (c)(2)(A) of this Rule.
(h) Prescribing Authorify.
( 1 ) the prescribing stipulations contained in this
Paragraph apply to writing prescriptions and ordering
the administration of medications;
(2 ) Prescribing and dispensing stipulations are as follows:
(A) Drugs and devices that may be prescribed by
the nurse practitioner in each practice site shall
be included in the yvritten stand i ng protocols as
outlined in Paragraph (i). Subparagraph (2) of
this Rule.
(B) Controlled Substances (Schedules 2. 2N. 3.
3N. 4. 5) defined by the State and Federal
Controlled Substances Acts may be procured.
prescribed or ordered as established in written
standing protocols, providing all of the
follow ing restrict i ons requirements are met:
(i) the nurse practitioner has an assigned
DEA number which is entered on each
prescription for a controlled substance;
(ii) dosage units for schedules 2. 2N. 3 and
3N are limited to a one w ee k's supply,
e xc e pt D e xtroamphetamin e ,
M e th\lph e nidat e and P e mol i n e for th e
tr e atm e nt of Att e ntion D e ficit Disord e r
(ADD) or Att e ntion D e ficit Disord e r
with Hyp e ractivity (ADHD) wh i ch ar e
limit e d to a 30 day supply; and
(iii) the prescription or order for schedules 2,
2N. 3 and 3N may not be refilled.
(C ) The nurse practitioner may prescribe a drug not
included in the site-specific yvritten standing
protocols only as follows:
(I) upon a specific written or verbal order
13:8
NORTH CAROLINA REGISTER
October 15, 1998
729
PROPOSED RULES
obtained from t h e sup e rvising a primary
or back-up supervisini^ ph\ sician before
the prescription or order is issued b\ the
nurse practitioner; and
(ii) the verbal or written order as described
in Subpart (h)(2)(C)(i) of this Rule shall
be entered into the patient record arni
s ign e d by th e nurs e prnct i t i oner with a
notation that it is issued on the specific
order of th e supervising a primar\ or
back-up supervising ph\sician and
siuned by the nurse practitioner and the
physician.
(D) Refills may be issued for a period not to exceed
one \ ear except for schedules 2. 2N. 3 and 3N
controlled substances which ma_\ not be
refilled.
(E) Each prescription shall be noted on the
patient's chart and include the following
information:
(i) medication and dosage;
(ii) amount prescribed;
(iii) directions for use;
(iv) number of refills; and
(v) signature of nurse practitioner.
(F) The prescribing number assigned by the
Medical Board to the nurse practitioner shall
appear on all prescriptions issued by the nurse
practitioner.
(G) Prescription Format:
(i) all prescriptions issued b\' the nurse
practitioner shall contain the super\ ising
physician{s) name, the name of the
patient, and the nurse practitioner's
name, telephone number, and
prescribing number;
(ii) the nurse practition e r practitioner's
assigned DEA number shall be written
on the prescription fomi w hen a
controlled substance is prescribed as
defined in Paragraph (h) Part (B) of this
Rule; and
(3) The nurse practitioner ma\ obtain approval to
dispense the drugs and de\ ices included in the written
standing protocols for each practice site from the
Board of Phamiac>, and s hall carry th e function of
disp e nsing dispense in accordance v\ ith 2 1 NCAC 46
. 1 700, which is hereby incorporated by reference
including subsequent amendments of the referenced
materials.
(i) Physician Sup e rv i sion. Sup e rvision shall be provided by
th e approved physician(s) as follows:
(4-) Availabilit\:
(-A) Vfte sup e rvising ph)' s ician sheH be
{&) The sup e rvising physician shall be r e adi l y
avai l abl e — fw — con s ultation — er — r e ferrals — ef
pati e nt s from the nurse practitioner; and
{Q^ If the nurs e practition e r i s to p e rform duties at
a sit e awa\ from th e sup e rvising physician, the
app l ication sha+1 cl e arK sp e cify the
circum s tanc e s attd the sup e rvisory
arrang e m e nts.
(5^ Written Standing Protoco l s:
a>-
fA-) Written — standing protocol s — approved — artd
sign e d by both th e sup e rvising physician(s) and
th e nurs e practition e r sha l l b e maintain e d in
e ach practic e s i t e ;
ffr) Th e wr i tt e n standing protocols shall incl u d e th e
d ru g s, d e vic e s, m e dical tr e atm e nts, t e sts attd
proc e dur es that ma\ b e pr e scribed, ord e r e d and
i mp le m e nt e d — by — the — nurse practition e r
consist e nt with Paragraph (h) of this Rul e , and
wh i ch ar e appropriat e for th e diagnosis and
tr e atm e nt of th e most commonl) e ncount e r e d
h e alth probl e m s in that practic e s e tting;
fG) Th e writt e n standing protocols shall i n clud e a
pr e d e t e miin e d plan for e m e rg e nc\ services;
(©^ — Th e wr i tt e n standing protocol s shall sp e cify th e
proc e ss b> which th e nurs e practitioner shall
r e f e r a pati e nt to a physician other than an
approv e d s up e rvising phys i c i an; and
fE^ Th e nurs e practition e r sha l l b e pr e par e d to
demon s trat e upon r e qu e st to a m e mb e r of
e ith e r th e Board of Nursing or th e M e dical
Board, or an ag e nt, th e ability to perform
m e dical acts as outlin e d in th e sit e sp e cific
writt e n s tanding protocols.
Count e rsigning of M e dical Acts:
contmuou sl v
availabl e
401-
dir e ct
commun i cat i on b\ radio, t e l e pho ne , er
t e l e communications;
(A3 Th e maximum tim e int e rval b e tween th e nur se
practit i on e r's contact with th e pati e nt and
m e dical r e cord r e vi e w and count e rsigning of
m e dical act s b\ th e sup e rvising physician is
s e v e n days for outpati e nt (clinic/offic e ) nurs e
practition e r patient contacts.
(B^ The — time — int e rval — er — countersigning — ef
notations of m e dical act s in th e m e dical r e cords
ef inpati e nts — (hosp i tal, — long term — eafe
institution s) b\ th e sup e rvis i ng physician s hal l
comply with the rttte and
r e gulations — of — the — institution, — btrt — at — a
m i nimum:
-M) — th e initial workup, m e dical ord e rs and
tr e atm e nt plan, shall b e cou n t e rs i gn e d
within s e v e n days of th e tim e of
th e nurs e practition e r pati e nt contact;
nfiO
fit) — in the acute inpatient se tting, th e initial
work up, m e dical ord e rs and tr e atm e nt
piftfi s ha l l b e count e rs i gned and
dat e d w ithin two working davs of th e
nur se practition e r pati e nt contact.
730
NORTH CAROLINA REGISTER
October 15, 1998
13:8
PROPOSED RULES
>
>
{G^ flw — (WW — i nterval — beU^ ee n — fhe — nurs e
practition e r patient contact and count e rsigning
by th e supervising physician of th e nurs e
practition e r's notations of m e dical acts in th e
m e dical r e cords — ef — pati e nts — ifi — sp e cial
community ba se d — car e programs, such as
d i alysis and hospic e , shall compK with th e
rul e s and r e gulations of th e s p e cific car e
program.
(4) Supervising Physician s :
{-A-) A phy s ician in a graduat e m e dical e ducation
program, wh e th e r fully lic e n se d or ho l ding
onK a r e sid e nt's training lic e nse, cannot b e
nam e d as a sup e rvi s ing physician.
fB-) A physician in a graduate m e dical e ducation
program uho is also practicing in a non
training — situation — may — sup e rvis e — a — nurs e
practition e r in the non training s ituation if ful l y
lic e ns e d and approved to sup e rvis e by th e
Medical Board.
tij Quality Assurance standards for a Collaborative Practice
Agreement.
( I ) Availability: The primar\ or back-up supervisint;
ph\sician(s) and the nurse practitioner shall be
continuously available to each other for consultation
b\ direct communication or telecommunication.
(2j Written Protocols:
(A) Written protocols shall be agreed upon and
signed by both the primary supervising
physician and the nurse practitioner, and
maintained in each practice site.
(B) Written protocols shall be revie'.ed at least
yearly, and this revievs shall be acknovv ledged
bv a dated signature sheet, signed by both the
primary supervising physician and the nurse
practitioner, appended to the v\ritten protocol
and available for inspection by members or
agents of either board.
(C) The written protocols shall include the drugs.
devices, medical treatment, tests and
procedures that mav be prescribed, ordered and
implemented by the nurse practitioner
consistent with Paragraph (h) of this Rule, and
which are appropriate for the diagnosis and
treatment of the most commonly encountered
health problems in that practice setting.
(D) The written protocols shall include a pre-
determined plan for emergency services.
(E) The nurse practitioner shall be prepared to
demonstrate the ability to perform medical acts
as outlined in the written protocols upon
request by members or agents of either Board.
(3) Quality Improvement Process.
(A) The primary supervising physician and the
nurse practitioner shall develop a process for
the on-going review of the care provided in
each practice site to include a written plan for
evaluating the quality of care provided for one
or more frequently encountered clinical
problems: and
(B) This plan shall include a description of the
clinical problem(s), an evaluation of the current
treatment interventions, and if needed, a plan
for improving outcomes within an identified
time-frame.
(C) The qualin improvement process shall include
scheduled meetings betvseen the primary
supervising physician and the nurse
practitioner at least every six months.
Documentation for each meeting shall:
(i) identify clinical problems discussed,
including pro gress toward improving
outcomes as stated in Part (i)(3)(B)
of this Rule, and recommendations, if
any, for changes in treatment plan(s):
be signed and dated by those who
attended; and
iiil
(iii)
be available for review by members or
agents of either Board for the previous
five calendar years and be
retained by both the nurse practitioner
and physician.
(4) Nurse Practitioner-Physician Consultation. The
following requirements establish the minimum
standards for consultation between the nurse
practitioner primary or back-up supervising
physician(s):
(A) The nurse practitioner w ith temporary approval
shall have:
(i) review and countersigning of notations
of medical acts bv a primary or back-up
superv ising phy sician w ithin seven dav s
of nurse practitioner-patient contact for
the first six months of collaborative
agreement. This time-frame includes the
period of interim status.
(ii) face-to-face consultation vsith the
primary supervising physician on a
weekly basis for one month after
temporary approval is achieved and at
least monthly throughout the period of
temporary approval.
(B) The nurse practitioner with first time approval
to practice shall have:
(i) review and countersigning of notations
of medical acts by a primary or back-up
superv ising physician \y ithin seven days
of nurse practitioner-patient contact for
the first six months of collaborative
agreement. This time-frame includes
the period of interim status.
(ii) face-to-face consultation with the
primary supervising physician on a
vveeklv basis for one month after full
13:8
NORTH CAROLINA REGISTER
October 15. 1998
731
PROPOSED RULES
approval is received and at least monthly
for a period no less than the succeedine
five months.
(C) The nurse practitioner previousK approved to
practice in North Carohna who changes
priman supervising ph\sician shall have face-
to-face consultation with the primary
su pervising ph\sician weekly for one month
and then monthly for the succeeding five
months.
(D) Documentation of consultation shall:
ID
Liii
(iii)
identilA clinical issues discussed and
actions taken:
be signed and dated by those who
attended: and
be available for review by members or
agents of either Board for the previous
t1ve calendar vears and be retained bv
both the nurse practitioner and
physician.
(j) Method of Identification. The nurse practitioner shall
wear an appropriate name tag spelling out the words "Nurse
Practitioner."
(k) Disciplinary Action. The approval of a nurse practitioner
may be restricted, denied or terminated bv the Medical Board
and the registered nurse license mav be restricted, denied, or
tenninated bv the Board of Nursing. Nursing Board, if after due
notice and hearing in accordance with prov isions of Article 3 A
or G.S. 150B. the appropriate Board shall find one or more of
the following:
( 1 ) that the nurse practitioner has held himself or herself
out or permitted another to represent the nurse
practitioner as a licensed physician;
(2) that the nurse practitioner has engaged or attempted to
engage in the performance of medical acts other than
according to the written protocols and collaborative
practice agreement: at th e dir e ction of or und e r th e
sup e rvi s ion of a physician lic e ns e d by th e M e dical
Board who i s approv e d bv the Board to b e that nurs e
practition e r' s s up e rvising physician:
t^ that th e nurs e practition e r has p e rfonn e d or att e mpt e d
to perform m e dical act s not approv e d in th e sit e
s p e cific standing protocols or for which th e nurs e
practition e r i s not qualifi e d by e ducation and training
to p e rform.
(3) {M that the nurse practitioner has been conv icted in
any court of a criminal offense:
(4) f?^ that the nurse practitioner is adjudicated mentally
incompetent or that the nurse practitioner's mental or
physical condition renders the nurse practitioner
unable to safely function as a nurse practitioner: or
(5) (4) that the nurse practitioner has failed to comply
with any of the provisions of this Rule.
(I) Fees:
( I ) An application fee of one hundred dollars (SIOO.OO)
shall be paid at the time of initial application for
approval and each subsequent application for
(2)
ii!
t4j
(m)
approval to practice. Th e on e hundr e d dollar
(SIOO.OO) All initial, subsequent and volunteer
application fee fees shall be equall) divided between
the Board of Nursing and the Medical Board. No
other fees are shared. Application fee shall be rvvents
dollars (S20.00) for volunteer approval.
The fee for annual renewal of approval, due July 1. is
fift> dollars (S50.00).
The fee for annual renewal ot' volunteer approval, due
Julv I. shall be ten dollars (SIO.OO).
{Vi No portion of any fee in this Rule is refundable.
Practice During a Disaster. A nurse practitioner
approved to practice in this State or another state is authorized
to perfomt medical acts, tasks, or functions as a nurse
practitioner under the supervision of a physician licensed to
practice medicine jn North Carolina during a disaster with a
county in which a state ot~ disaster has been declared or counties
contiguous to a countv m which a state of disaster has been
declared. The nurse practitioner shall notify the Boards jn
writing of the names, practice locations and telephone numbers
for the nurse practitioner and each primary superv ising phv sician
within 15 davs of the first performance of medical acts, tasks, or
functions as a nurse practitioner during the disaster. Teams of
physician(s) and nurse practitioner(s) practicing pursuant to this
Rule shall not be required to maintain on-site documentation
describing supervisory arrangements and instructions for
prescriptive authority as otherwise required pursuant to
Paragraphs (h) and (i) of this Rule.
Authorin- G.S. 90-6: 90-18(13). (14): 90-18.2: 90-1' 1.20(4): 90-
ri.20('): 90-r 1. 23(b): 90-n\.36:90-\7\.37:90-\7\.42:
732
NORTH CAROLIX4 REGISTER
October 15, 1998
13:8
TEMPORAR Y RULES
The Cudifier of Rules has entered the following lemporaiy riile(s) in the North Carolina Administrutive Code. Pursuant to G.S.
150B-21. Uel. publication of a temporary rule in the North Carolina Register serves as a notice of rule-making proceedings
unless this notice has been previously published hy the agency.
TITLE 10 - DEPARTMENT OF HEALTH
AND HUMAN SERVICES
Rule-making Agency: DHHS-Division of Medical Assistance
Rule Citation: 10 NCAC 26H .0212-.021 3
Effective Date: September 16. 1998
Findings Reviewed and Approved by: Beecher R. Gray
Authority for the rule-making: CS. 10H.4-25(b): lOHA-54:
lOHA-55: 42 C.F.R. 447. Subpart C
Reason for Proposed Action: This change is necessary to
ensure the cotitinuing availability of an adequate level of
services to Medicaid arid uninsured persons.
Comment Procedures: Written comments concerning this
rule-making action must be submitted to Portia It'. Rochelle.
Rule-making Coordinator Division of Medical Assistance. 1985
Umslead Drive. Raleigh. NC 2^603.
CHAPTER 26 - MEDICAL ASSISTANCE
SUBCHAPTER 26H - REIMBURSEMENT PLANS
SECTION .0200 - HOSPITAL INPATIENT
REIMBURSEMENT PLAN
.0212 EXCEPTIONS TO DRG REIMBURSEMENT
(a) Covered psychiatric and rehabilitation inpatient services
provided in either specialty hospitals. Medicare recognized
distinct part units (DPU). or other beds in general acute care
hospitals shall be reimbursed on a per diem methodology.
( 1 ) For the purposes of this Section. ps\chiatric inpatient
services are defined as admissions where the primary
reason for admission would result in the assignment
of DRGs in the range 424 through 432 and 436
through 437.
For the puiposes of this Section, rehabilitation
inpatient services are defined as admissions where the
primary reason for admissions would result in the
assignment of DRG 462. All services provided by
specialty rehabilitation hospitals are presumed to
come under this definition.
(2) When a patient has a medically appropriate transfer
from a medical or surgical bed to a psychiatric or
rehabilitative distinct part unit within the same
hospital, or to a specialty hospital the admission to the
distinct part unit or the specialty hospital shall be
recognized as a separate service which is eligible for
reimbursement under the per diem methodology.
Transfers occurring within general hospitals from
acute care services to non-DPU psychiatric or
rehabilitation services are not eligible for
reimbursement under this Section. The entire hospital
stay in these instances shall be reimbursed under the
DRG methodology.
(3) The per diem rate for psychiatric services is
established at the lesser of the actual cost trended to
the rate year or the calculated median rate of all
hospitals providing psychiatric services as derived
from the most recent as filed cost reports.
(4) Hospitals that do not routinely provide psychiatric
services shall have their rate set at the median rate.
(5) The per diem rate for rehabilitation services is
established at the lesser of the actual cost trended to
the rate year or the calculated median rate of all
hospitals providing rehabilitation services as derived
from the most recent filed cost reports.
(6) Rates established under this Paragraph are adjusted
for infiation consistent with the methodology under
Rule .0211 Subparagraph (d)(5) of this Section.
(b) To assure compliance with the separate upper payment
limit for State-operated facilities, the hospitals operated by the
Department rf Human Resources and all the primary affiliated
teaching hospitals for the University of North Carolina Medical
Schools shall be reimbursed their reasonable costs in accordance
with the provisions of the Medicare Provider Reimbursement
Manual. This Manual referred to as. (HCFA Publication #15-1)
is hereby incorporated by reference including any subsequent
amendments and editions. A copy is available for inspection at
the Division of Medical Assistance, 1985 Umstead Drive.
Raleigh, NC. Copies may be obtained from the U.S. Department
of Commerce, National Technical Information Service.
Subscription Department. 5285 Port Royal Road. Springfield.
VA 22161 at a cost of one hundred forty seven dollars
($147.00). Purchasing instructions may be received by calling
(703) 487-4650. Updates are available for an additional fee.
The Division shall utilize the DRG methodology to make interim
pa\ments to providers covered under this Paragraph, setting the
hospital unit value at a level which can best be expected to
approximate reasonable cost. Interim payments made under the
DRG methodology to these providers shall be retrospectively
settled to reasonable cost.
(c) When the Norplant contraceptive is inserted during an
inpatient sta> the current Medicaid fee schedule amount for the
Norplant kit shall be paid in addition to DRG reimbursement.
The additional payment for Norplant shall not be paid when a
cost outlier or day outlier increment is applied to the base DRG
payment.
(d) Hospitals operating Medicare approved graduate medical
13:8
NORTH CAROLINA REGISTER
October 15, 1998
733
TEMPOR.4RY RULES
education programs shall recei\e a per diem rate adjustment
which reflects the reasonable direct and indirect costs of
operating these programs. The per diem rate adjustment shall be
calculated in accordance with the provisions of Rule .0211
Paragraph (t~) of this Section.
(e) For th e 12 month p e riod e nding S e pt e mb e r 30. 1005.
hosp i tal s licens e d b> th e Stat e of North Carolina and reimbursed
under the DRG m e thodology for mor e than 50 p e rc e nt of
M e d i caid i n pa tie nt discharg e s shall be entitl e d to an add i tional
pa\in e nt i n an amount d e t e rmin e d b\ the Director of th e
Division of Medical Assistanc e , subject to the following
provi s ions: Hospitals licensed by the State of North Carolina
and reimbursed under the DRG methodolo g\ for more than 50
percent of their Medicaid inpatient discharges for the 12-month
period ending September 30. 1998 shall be entitled to an
additional pa\ment for in patient and outpatient hospital services
in an amount determined by the Director of the Division of
Medical Assistance, subject to the follow ing pro\ isions:
(1) Th e maximum paym e nts aut h oriz e d b\ this Paragraph
for public hospitals that qual i fx und e r th e crit e ria in
Pa r t { A) of this Subparagraph shall b e calc ul a te d by
asc e rtaining th e r e asonabl e cost of inpati e nt and
outpati e nt — hospital — M e dicaid — s e rvic es . — pkis — the
r e asonabl e direct and indir e ct costs attributab le to
M e dica i d service s of op e rating Medicar e approv e d
graduat e m e dical e ducation programs, l e ss M e dicaid
pav ments r e c e iv e d or to b e r e c e iv e d for th e se s e r\ ic e s.
With r e sp e ct t o qualifx i n g hosp i tals that ar e not public
hospitals — qualifi e d — und e r — Part — (-A-) — evf — th+s
Subparagraph, th e ma.ximum pavm e nt authoriz e d bv
this Paragraph shall b e calculat e d bv asc e rtaining
6 4 .71 p e rc e nt of th e unr e imburs e d r e asonabl e cost
ca l culated by us e of th e m e thodo l og> d es crib e d in th e
pr e c e ding se nt e nc e , not to exc ee d i n th e aggr e gat e for
all s uch hospitals t1fty on e million s e v e n hundr e d
thousand dollars ($5 1 .700.000). For purposes of this
Subparagraph: To ensure that the payments
authorized by this Subparagraph for qualified public
hospitals that qualifi under the criteria in Part (A) of
this Subparagraph, do not exceed the upper limits
established by 42 CFR 447.272. the maximum
payments authorized for qualified public hospitals
shall be determined for all such qualified public
hospitals for the 12-month period ending September
30. 1998 by calculating the "Medicaid Deficit" for
each hospital. The Medicaid Deficit shall be
calculated by ascertainin g the reasonable costs of
inpatient and outpatient hospital Medicaid serv ices:
plus the reasonable direct and indirect costs
attributable to inpatient and outpatient Medicaid
serv ices of operating Medicare approved graduate
medical education programs: less Medicaid payments
received or to be received for these services. For
purposes of this Subparagraph:
(A) A qualified public hospital is a hospital that
meets the other requirements of this Paragraph
and:
(i) v\as owned or operated bv a State (or by
an instrumentalitv or a unit of
government within a State) from
September 8 through and including
September 30. +99»^ 1998:
(ii) indicat e d its l e gal e ntitv status as a
gov e rnm e nt unit on th e Hospital Lic e ns e
R e n e wal — Application — fil e d with th e
Division of Facility Servic es North
Carolina D e partm e nt — ef — Human
Resourc es for th e 1995 cal e ndar >ear:
aft4 verified its status as a public
hospital by certifying State, local-
hospital district or authority government
control on the most recent version of
Form HCFA-1514 filed with the Health
Care Financing Administration. U.S.
Department of Health and Human
Services on or before September 8.
1998: and
(iii) submits to th e Division of M e dical
As s istanc e on or b e for e S e pt e mb e r 20.
1905 by us e of a fomi pr e scrib e d bv the
Divi s ion. — a — c e rtificate — of — public
e xp e nditur es to support th e non federal
shar e of th e paym e nt it shall r e c e iv e
pursuant to this Paragraph, files w 'th the
Division on or before Septenu •; 8.
1998 by use of a form prescribed by the
Division a certificate of public
expenditures to support a portion of the
non-federal share of the payment rt shall
receive pursuant to this Subparagraph.
(B) Reasonable costs shall be ascertained in
accordance with the provisions of the Medicare
Provider Reimbursement Manual Manual.
This Manual, r e f e rr e d to as HCFy\ Publication
"15 1. is h e r e by incorporat e d by r e f e r e nc e
including — sub se qu e nt — am e ndm e nts — aftd
editions. A copy of this Manual is ava i lable
for insp e ction at th e Divi s ion of M e dical
A s si s tanc e . 1985 Umst e ad Driv e . Ral e igh. NC.
Copies — Hw. — be — obtain e d — frem — the — yS
D e partm e nt of Commerce. National Technical
Infonnation Serv ic e . Subscription Departm e nt.
5285 Port Roval Road. Springfi e ld. VA 22161.
at a cost of one hundr e d forty s e v e n dollars
(S1 4 7.00). — Purchasing instructions mav b e
r e c e iv e d bv calling (703) 4 87 1 650. Updat e s
ar e availabl e for an additional f ee , as defined in
Paragraph (b) of' tMs Rule.
(C) The phrase "Medicaid payments received or to
be received for these services" shall exclude all
Medicaid disproportionate share hospital
payments received or to be received.
receiv ed. except for paym e nts r e c e iv e d or to b e
r e c e iv e d pur s uant to 10 NCAC 26H .0213(d).
(2) Should b 4 .7l p e rc e nt of th e unr e imburs e d r e asonabl e
cost of M e dicaid s e rv i c es for qual i fy ing hospitals that
734
NORTH CAROLIXA REGISTER
October 15, ] 998
13:8
TEMPOR.4RY RULES
ar e not qualifi e d public hospitals b e d e t e rmin e d b\ th e
Dir e ctor of the Divis i on of M e dical A ss istanc e to
exceed th e sum of fift\ on e million s e v e n hundr e d
thousand — dollar s — (S5 1.700.000). — tlw — maximum
paym e nt ot'tlfh one million s e v e n hundr e d thou s and
dollars (S5 1.700.000) to such hospitals authorized by
this Paragraph shall b e prorat e d among such hospitals
bas e d on unr e imburs e d r e asonabl e costs. Qualified
public hospitals shall receive a payment under this
Paragraph in an amount (including the public
expenditures certified to the Di\ ision b\ each hospital
for the non-federal share) not to exceed each
hospital's Medicaid Deficit.
(3) Payments authoriz e d b_\ this Paragraph shall b e mad e
on or befor e S e pt e mb e r 30. 1905 sol e l> on th e basis
of an es timat e of costs incurr e d and paym e nts
r e c e iv e d for M e dicaid s e rvic e s during th e 12 months
e nding S e ptemb e r 30. IQ95. — Th e Dir e ctor of th e
Div i sion of M e dical As s istanc e shall d e t e rmin e th e
amount of th e e stimat e d pavm e nts to be made bv
analys i s of costs incurred and pavm e nt s rec e iv e d for
M e dicaid se rvic e s as r e port e d on cost r e ports for
fi s cal y e ar s e nding in 100 1 til e d b e for e S e pt e mb e r 15.
1005 and suppl e m e nt e d b\ such additional financial
information a s i s asailabl e to th e D i r e ctor wh e n th e
es timat e d paym e nt s ar e calculat e d if and to th e e xt e nt
isr'" that th e Dir e ctor conclud e s that such additional
financial — information — is — r e liabl e — aftd — r ele vant.
Hospitals licensed by the State of North Carolina and
reimbursed under the DRG methodology for more
than 50 percent of their Medicaid inpatient discharges
for the 12-months ending September 30. 1908 that are
not qualified public hospitals as defined jn this
Paragraph shall be entitled to an additional payment
under this Subparagraph for the Medicaid Deficit
calculated in accordance vsith Subparagraph ( I ) of
this Paragraph in an amount not to exceed the
Medicaid Deficit.
(4) Sol e ly to e nsur e that es timat e d paym e nts pursuant to
Subparagraph (3) of th i s Paragraph do not e xc ee d the
hospital sp e cific and stat e aggr e gat e upper limits to
such paym e nts e stabli s h e d bv appl i cabl e federal law
and r e gulation, such paym e nts shall be cost settled as
det e rmin e d by an ind e p e nd e nt CPA furni s h e d bv th e
provid e r, ba se d on cost r e ports covering the 12
months e nding S e pt e mber 30. 1005. and hosp i tal
r e cipi e nt s of such payments shall promptly r e fund
s uch paym e nts if and to the e xtent that such paym e nts
e xc ee d th e applicabl e upper limit. — No additional
paym e nts s hall b e made in conn e ction y\ ith th e cost
s e ttl e m e nt. Payments authorized by tfus Paragraph
shall be made solely on the basis of an estimate of
costs incurred and payments receiv ed for inpatient and
outpatient Medicaid services during the payment
fiscal year 1098. The Director of the Division of
Medical Assistance shall determine the amount of the
estimated payments to be made by analysis of costs
incurred and payments received for Medicaid services
as reported on cost reports for fiscal year ending in
1997 filed before September 8, 1998 and
supplemented by additional financial information
available to the Director when the estimated pay ments
are calculated if and to the extent that the Director
concludes that the additional financial information is
reliable and relevant.
(5) Th e paym e nt s authoriz e d bv this Paragraph shall b e
e ff e ctiv e in accordanc e with G.S. 108A 55(c). To
ensure that estimated pavments pursuant to this
i6J
Paragraph do not exceed the State aggregate upper
limits to such payments established by applicable
federal law and regulation (42 CFR 447.272). such
payments shall be cost settled within 12 months of
receipt of tjie completed cost report covering the 12-
month period ending September 30. 1998. There shall
be a separate cost settlement procedure for inpatient
and outpatient hos pital serv ices. In addition, for both
inpatient and outpatient hospital services, there shall
be a separate cost settlement procedure for state-
operated hospitals and for non-state operated
hospitals. As to each of these separate cost settlement
procedures, if it should be determined that aggregate
payments under this Paragraph exceed aggregate
upper limits for such payments, any hospital that
received payments under this Paragraph in excess of'
unreimbursed reasonable costs as defined in this
Paragraph shall promptly refund hs proportionate
share of aggregate payments in excess of aggregate
upper limits. The proportionate share of each such
hospital shall be ascertained bv calculating for each
such hospital its percentage sh'ire of aJJ payments to
all members of thie cost settle nent group that are in
excess of unreimbursed reasonable costs, and
multiplying that percentage times the amount by
which aggregate payments being cost settled exceed
aggregate upper limits applicable to such payments.
No additional pavments shall be made in connection
with these cost settlements.
The pavments authorized by this Paragraph shall be
effective in accordance with G.S. 108A-55(c).
:5(h):
lOSA-54:
Histoiy Note: Auihorin- G.S. 108.4-
108.4-55/0: 42 C.F.R. 44'. Subpart C:
Eff. Febriiaiy 1. 1995:
Filed as a Temporary .4mendmettt Eff. September 15. 1995. for
a period of 180 days or until I lie permanent rule becomes
effective, whichever is sooner:
.4mended Eff. Januaiy 1. 1996:
Temporaiy .4mendment Eff September 25. 1996:
Temporaiy .4mendment Eff September 30. 199~;
Temporary .4mendment Expired July 31. 1998:
Temporar\- .4mendment Eff. September 16. 1 998.
.0213 DISPROPORTIONATE SHARE HOSPITALS
(a) Hospitals that serve a disproportionate share of
low-income patients and have a Medicaid inpatient utilization
rate of not less than one percent are eligible to receive rate
13:8
NORTH CAROLINA REGISTER
October 15, 1998
735
TEMPORA RYR ULES
adjustments. The cost report data and tlnancial information that
is required in order to quaiit\ as a disproportionate share
hospital effective April 1 . 1 99 1 is based on the fiscal year ending
in 1989 for each hospital, as submitted to the Division of
Medical Assistance on or before April 1. 1991. The cost report
data and financial information to quality as a disproportionate
share hospital etTecti\e JuK 1. 1991 is based on the fiscal \ear
ending in 1990 for each hospital, as submitted to the Div ision of
Medical Assistance on or before September 1. 1991. In
subsequent vears. qualifications effecti\e JuK I of an> particular
\ear are based on each hospital's fiscal year ending in the
preceding calendar year. The patient davs. costs, revenues, or
charges related to nursing facility services, swing-bed services.
home health services, outpatient services, or any oti'or service
that is not a hospital inpatient ser\ ice cannot be useu to qualify
for disproportionate share status. A hospital is deemed to be a
disproportionate share hospital if:
( 1 ) The hospital has at least two obstetricians w ith staff
privileges at the hospital who have agreed to pro\ ide
obstetric services to indiv iduals eligible for Medicaid.
In the case of a hospital located in a rural area, the
term obstetrician includes any physician with staff
privileges at the hospital to perform non-emergency
obstetric services as of December 21. 1987 or to a
hospital that predominantK- serves individuals under
18 \ears of age: and
(2) The hospital's Medicaid inpatient utilization rate,
defined as the percentage resulting from dividing
Medicaid patient da>s b\ total patient da\s. is at least
one standard deviation above the mean Medicaid
inpatient utilization rate for all hospitals that receive
Medicaid pa\ments in the state: or
(3) The hospital's low income utilization rate exceeds 25
percent. The low-income utilization rate is the sum
of:
(A) The ratio of the sum of Medicaid inpatient
revenues plus cash subsidies received from the
State and local governments, divided b\' the
hospital's total patient revenues; and
(B) The ratio of the hospital's gross inpatient
charges for charity care less the cash subsidies
for inpatient care received from the State and
local governments divided by the hospital's
total inpatient charges; or
(4) The sum of the hospital's Medicaid revenues, bad
debts allowance net of recoveries, and charitv care
exceeds 20 percent of gross patient revenues; or
(5) The hospital, in ranking of hospitals in the State, from
most to least in number of Medicaid patient days
pro\ ided. is among the top group that accounts for 50
percent of the total Medicaid patient da\s provided by
all hospitals in the State: or
(6) it is a Psvchiatric hospital operated by the North
Carolina Department of Human Resources. Division
of Mental Health. Developmental Disabilities.
Substance Abuse Services (DMH DD'SAS) or UNC
Hospitals operated by the University of North
Carolina.
(b) The rate adjustment for a disproportionate share hospital
is 2.5 percent plus one fourth of one percent for each percentage
point that a hospital's Medicaid inpatient utilization rate exceeds
one standard dev iation of the mean Medicaid inpatient utilization
rate in the State. The rate adjustment is applied to a hospital's
pa)ment rate exclusive of an\ previous disproportionate share
adjustments.
(c) An additional one time pavment for the 12-month period
ending September 30. 1995. in an amount determined b\ the
Director of the Division of Medical Assistance, may be paid to
the Public hospitals that are the primary affiliated teaching
hospitals for the University of North Carolina Medical Schools
less pavments made under authoritv of Paragraph (d) of this
Rule. The payment limits of the Social Security Act. Title XIX.
Section 1923(g)(1) applied to this pavment require that when
this pa\ment is added to other Disproportionate Share Hospital
payments, the additional disproportionate share payment will not
exceed 100 percent of the total cost of providing inpatient and
outpatient services to Medicaid and uninsured patients less all
payments received for services provided to Medicaid and
uninsured patients. The total of all payments ma\ not exceed the
limits on DSH funding as set for the State by HCFA.
(d) Effective July I, 1994. hospitals eligible under
Subparagraph (a)(6) of this Rule shall be eligible for
disproportionate share payments, in addition to other pavments
made under the North Carolina Medicaid Hospital
reimbursement methodology, from a disproporti 'ate share pool
under the circumstances specified in Subparagraphs ( I ). (2) and
(3) of this Paragraph.
(1) An eligible hospital will receive a monthly
disproportionate share payment based on the monthly
bed days of services to low income persons of each
hospital divided b\' the total monthlv bed days of
services to low income persons of all hospitals items
allocated funds.
(2) This payment shall be in addition to the
disproportionate share pavments made in accordance
with Subparagraphs (a)(1) through (5) of this Rule.
However. DMH DD SAS operated hospitals are not
required to qualify under the requirements of
Subparagraphs (a)( 1 ) through (5) of this Rule.
(3) The amount of allocated funds shall be determined by
the Director of the Division of Medical Assistance,
but not to exceed the quarterK grant award of funds
(plus appropriate non-federal match) earmarked for
disproportionate share hospital pavments less
pavments made under Subparagraphs (a)( 1 ) through
(5) of this Rule divided b\ three. In Subparagraph
(d)( 1 ) of this Rule, bed days of services to low income
persons is defined as the number of bed da\s provided
to individuals that have been determined by the
hospital as patients that do not possess the financial
resources to pav' portions or all charges associated
with care provided. Low income persons include
those persons that have been determined eligible for
medical assistance. The count of bed dav s used to
determine pavment is based upon the month
immediateK prior to the month that pavments are
736
NORTH CAROLISA REGISTER
October 15, 1998
13:8
TEMPORAR Y RULES
(.
made. Disproportionate share payments to hospitals
are limited in accordance with The Social Security
Act as amended. Title XIX section 1923(g), limit on
amount of pavment to hospitals.
(e) Subject to the availability of funds, hospitals that: qualify
as disproportionate share hospitals under Subparagraphs (a)( 1 )
through (5) of this Rule for the fiscal years ended September 30.
1995, 1996 and 1997; operate Medicare approved graduate
medical education programs and reported Medicaid costs
attributable to such programs to the Division on cost reports for
fiscal years ending in 1995, 1996 and 1997; and incur for the
12-month period ending September 30. 1997 unreimbursed costs
(calculated without regard to payments under either this
Paragraph or Paragraph (0 of this Rule) for providing inpatient
and outpatient services to uninsured patients in an amount in
excess of two million five hundred thousand dollar^-
($2,500,000) shall be eligible for disproportionate share
payments for such services from a disproportionate share pool
under the circumstances specified in Subparagraphs ( 1 ) through
(7) of this Paragraph.
(1) Qualification for the 12 month period ending
September 30. 1996 shall be based on cost report data
and uninsured patient data certified to the Division by
hospitals on or before September 23. 1996 for fiscal
years ending in 1995. in connection with the
disproportionate share hospital application process.
Qualification for subsequent 12 month periods ending
September 30 of each year shall be based on cost
report data and uninsured patient data certified to the
Division by hospitals on or before September 1 of
each subsequent year, for the fiscal year ending in the
preceding calendar year.
(2) Any payments made pursuant to this Paragraph shall
be calculated and paid no less frequently than
annually, and prior to the calculation and payment of
any disproportionate share payments pursuant to
Paragraph (f) of this Rule.
(3) For the 12 month period ending September 30. 1996
a payment shall be made to each qualified hospital in
an amount detennined b\ the Director of the Division
of Medical Assistance based on a percentage (not to
exceed a maximum of 23 percent) of the
unreimbursed costs incurred by each qualified
hospital for inpatient and outpatient services provided
to uninsured patients.
(4) In subsequent 12 month periods ending September
30th of each year, the percentage payment shall be
ascertained and established by the Division by
ascertaining funds available for payments pursuant to
this Paragraph divided by the total unreimbursed costs
of all hospitals that qualifx for pavments under this
Paragraph for providing inpatient and outpatient
services to uninsured patients.
(5) The payment limits of the Social SecuritN Act. Title
XIX, section 1923(g)(1) applied to the payments
authorized by this Paragraph require that when this
payment is added to other disproportionate share
hospital payments, the total disproportionate share
payments shall not exceed 100 percent of the total
costs of providing inpatient and outpatient services to
Medicaid and uninsured patients for the fiscal year in
which such payments are made, less all payments
received for services to Medicaid and uninsured
patients. The total of all disproportionate share
hospital payments shall not exceed the limits on
disproportionate share hospital funding as established
for this State by HCFA.
(6) To ensure that payments pursuant to Paragraph (e) do
not exceed the State aggregate upper limits to such
payments established by applicable federal law and
regulation (42 C.F.R. 447.272), such payments shall
be cost settled within 12 months of receipt of the
completed cost report covering the period for which
such payments are made. If any hospital receives
payments, pursuant to this Subparagraph in excess of
the percentage established by the Director under
Subparagraph (d)(3) of this Rule, ascertained without
regard to other disproportionate share hospital
payments that may have been received for services
during the 12-month period ending September 30,
1996. such excess payments shall promptly be
refunded to the Division. No additional payment shall
be made to qualified hospitals in connection with the
cost settlement.
(7) The pa>ments authorized by Subparagraph (6) shall
be effective in accordance with G.S. 108A-55(c).
(0 An additional one-time disproportionate share hospital
payment during the 12-month period ending September 30, 1997
1998 (subject to the availability of funds and to the payment
limits specified in this Paragraph) shall be paid to qualified
public hospitals. For purposes of this Paragraph, a qualified
public hospital is a hospital that qualifies for disproportionate
share hospital status under Subparagraphs (a)( 1 ) through (5) of
this Rule; does not qualify for disproportionate share hospital
status under Subparagraph (a)(6) of this Rule; was owned or
operated by a State (or by an instrumentality or a unit of
government within a State) from September 1, 1997 8^ 1998
through and including September 30. 1907; 1998; verified its
status as a public hospital by certifying state, local, hospital
district or authority government control on the most recent
version of Form HCFA-1514 tiled with the Health Care
Financing Administration, U.S. Department of Health and
Human Services on or before September 1. 199 7 8. 1998; files
with the Division on or before September 1 1997 8^ 1998; by use
of a form prescribed by the Division a certification of its
unreimbursed charges for inpatient and outpatient services
provided to uninsured patients during the fiscal year ending in
1906; 1997; and submits to the Division on or before September
1, 1007 b> use of a form prescribed by the Division a certificate
of public expenditures.
( 1 ) The payment to qualified public hospitals pursuant to
this Paragraph for the 12-month period ending
September 30, +097 1998 shall be based on and shall
not exceed the unreimbursed charges certified to the
Division by each such hospital by use of a form
prescribed by the Division for inpatient and outpatient
13:8
NORTH CAROLINA REGISTER
October 15, 1998
737
TEMPORARY RILES
ser\ices presided to uninsured patients for the fiscal
Near ending in 1Q96. 1997. to be con\erted b_\ the
Di\ision to unreimbursed cost b\ multipi\ing
unreimbursed charges times the cost-to-charge ratio
established b\ the Di\ ision for each hospital for the
fiscal \ear ending in 1996. 1997. Paxments
authorized b\ this Paragraph shall be made no less
frequenth than annualK.
(2) .An\ payments pursuant to this Paragraph shall be
ascertained and paid after an\ disproportionate share
hospital pa>Tnents that ma\ ha\ e been or ma\ be paid
b\ the Di\ ision pursuant to Paragraphs (d) and (e) of
this Rule.
(3) The pa\ment limits of the Social Securit> Act. Title
XIX. Section 1923(g)(1) applied to this pa\ment
require that when this pa\ment is added to other
disproportionate share hospital pa>ments. the total
disproportionate share hospital payments will not
exceed 100 percent of the total costs of pro\iding
inpatient and outpatient services to Medicaid and
uninsured patients for the fiscal \ear in which such
payments are made, less all pa\ments recei\ed for
ser\ ices to Medicaid and uninsured patients for that
>ear. The total of all DSH payments b\ the Di\ ision
maN not exceed the limits on disproportionate share
hospital funding as established for this State b\
HCFA for the fiscal \ear in which such payments are
made.
(4) To ensure that estimated pa\rnents pursuant to
Paragraph (f) do not exceed the State aggregate upper
limits to such payments established b\ applicable
federal law and regulation (42 C.F.R. 447.272). such
payments shall be cost settled within 12 months of
receipt of the completed cost report co\ering the 12
month period for which such payments are made. No
additional payments shall he made in connection w ith
the cost settlement.
(5) The payments authorized by Paragraph (f) of this Rule
shall be effective in accordance with G.S. 108A-
55(c).
(g) Effecti\ e w ith dates of payment beginning October 3 1 .
1996. hospitals that provide services to clients of State .Agencies
are considered to be a Disproportionate Share Hospital (DSH)
when the follow ing conditions are met:
(1) The hospital has a Medicaid inpatient utilization rate
not less than one percent and has met the
requirements of Subparagraph (a)( 1 ) of this Rule; and
(2) The State Agency has entered into a Memorandum of
Understanding (MOU) with the Division of Medical
Assistance (Division): and
(3) The inpatient and outpatient services are authorized
by the State Agency for vshich the uninsured client
meets the program requirements.
(A) For purposes of this Paragraph, uninsured
patients are those clients of the State Agency
that have no third parties responsible for any
hospital services authorized by the State
.Aaencv.
(B) DSH payments are paid for services to
qualified uninsured clients on the following
basis:
(i) For inpatient services the amount of the
DSH pay ment is determined by the State
Agency in accordance with the
applicable Medicaid inpatient payment
methodology as stated in Rule .02 1 1 of
this Section.
(ii) For outpatient services the amount of
the DSH payment is determined by the
State Agency in accordance with the
applicable Medicaid outpatient payment
methodology as stated in Section 24 of
Chapter 18 of the 1996 General
Assembly of North Carolina.
(iii) No federal funds are utilized as the non-
federal share of authorized payments
unless the federal fijnding is specifically
authorized by the federal funding
agency as eligible for use as the non-
federal share of payments.
(C) Based upon this subsection DSH payments as
submitted by the State Agency are to be paid
monthly in an amount to be reviewed and
approved by t'^e Division of Medical
.Assistance. The u il of all payments may not
exceed the limits on Disproportionate Share
Hospital funding as set forth for the state by
HCFA.
(h) An additional disproportionate share hospital payment
durin^i the 12-month period ending September 30. 1998 (subject
to the availabilit\ of funds and to the pavment limits specified m
this Paragraph ) shall be paid to Hospitals that qualil\ for
disproportionate share hospital status under Subparagraphs
(a)( 1 ) through (5) of this Rule and prov ide inpatient or outpatient
hospital serv ices to Medicaid Health Maintenance Organizations
("HMO") enrollees during the vear endin g September 30. 19^ '
For purposes of this Paragraph, a Medicaid HMO enrollee js a
Medicaid beneficiarv who receives Medicaid services through a
Medicaid HMO: a Medicaid HMO is a Medicaid managed care
organization, as defined in Section 1903 (m)( 1 )( A), that [s
licensed as a HMO and provides or arranges for services for
enrollees under a contract pursuant to Section 1903 (m)(2)( A)(i)
through (xi). To qualify for a DSH payment under this
Paragraph, a hospital must also file with the Division on or
before September 8^ 1998 by use of a form prescribed by. the
Division a certification of jts charges for inpatient and outpatient
services prov ided to Medicaid HMO enrollees during the fiscal
year ending in 1997.
The pav ment to qualified hospitals pursuant to this Paragraph for
the 12-month period ending September 30. 1998 shall be based
on charges certified to the Division by each hospital by use of a
fomi prescribed by the Division for inpatient and outpatient
Medicaid HMO services for the fiscal vear ending m 1997.
converted by the Division to cost by multiplying charges times
the cost-to-charge ratio established by the Division for each
hospital for the fiscal y ear ending in 1 997.
738
NORTH CAROLIX4 REGISTER
October 15. 1998
13:8
TEMPORAR Y RULES
( 1) The pa\ment shall then be determined b\' multipl\ ing
the cost times a percentage determined by the
Division. The payment percentage established b\ the
Division will be calculated to ensure that the
Medicaid HMO DSH payment authorized by this
Paragraph js equivalent (as a percentage ot' reasonable
cost) to the Medicaid supplemental payment
authorized h\ Paragraph (e) of this Rule.
(2) Payments pursuant to this Paragraph shall be
ascertained and paid after any other disproportionate
share hospital payments that may have been paid by
the Division for the 1 2-month period ending
September 30, 1998.
(3) The payment limits of the Social Security Act. Title
XIX, Section I923(g)( 1 ) applied to this payment
require that when this paxment js added to other
disproportionate share hospital payments, the total
disproportionate share hospital pa\ments will not
exceed 100 percent of the total costs ot' providing
inpatient and outpatient services to Medicaid and
uninsured patients for the fiscal \ear jn which such
payments are made, less all payments received for
services to Medicaid and uninsured patients for that
year The total of all DSH payments by the Division
ma\ not exceed the limits on Disproportionate Share
hospital funding as established for this State by
HCFA for the fiscal vear in which such payments are
made.
(4) To ensure that estimated payments pursuant to this
Paragraph do not exceed the State aggregate upper
limits to such payments established by applicable
federal law and regulation (42 CFR 447.272). such
payments shall be cost settled within 12 months of
receipt of the completed cost report covering the 12
month period for which such payments are made. No
additional payments shall be made in connection yvith
the cost settlement.
(5) The payments authorized by this Paragraph shall be
effective in accordance yvith G.S. 108A-55(c).
HisloijNote: Authorin-G.S. I08A-:5(h); IOHA-54: 108A-55:
42C.F.R. 44^. Subpart C:
Ejf. February I. 1995:
Amended Eff. July 1 . 1995:
Filed as a Temporary Amendment Eff. September 15. 1995. for
a period of 180 days or until the permanent rule becomes
effective, whichever is sooner:
Filed as a Temporary Amendment Eff. September 29. 1995. for
a period of IHO days or until the permanent rule becomes
effective, whichever is sooner:
Amended Eff. January 1. 1996:
Temporaiy Amendment Eff. September 25. 1996:
Teniporaiy .Amendment Eff. April 15. 199':
Temporary .Amendment Eff September 30. 199"^:
TemporaiT Amendment Eff. September 16. 1998.
TITLE 15A - DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES
Rule-making Agency: DENR - Marine Fisheries Commission
Rule Citation: 15A NCAC 3J .0103: 3M .0501
Effective Date: October 22. 1998
Findings Reviewed by Beecher R. Gray: Approved
Authority for the rule-making: (JS. 113-134: 113-182: 113-
221: 1438-28952
Reason for Proposed Action: 77?^ recent stock status report
lists red drum as stressed-declining. MFC Guidelines for
Fisheiy Management Plans require provisional plans within 90
days of the release of a stock status report indicating a species
is determined to be stressed-declining or depressed. This
temporaiy rule will protect the existing spawning stock, allow
for rebuilding to target levels, reduce recreational harvest
mortality, protect abundant year classes, restrict the directed
commercial fishery for red drum and reduce the bycatch of
undersized red drum by insuring all nets are fished frequently
and fish are effectively released.
Comment Procedures: Written comments may be submitted to
the Marine Fisheries Commission. Attention Juanita Gaskill. PO
Box ~69. Morehead Cit}\ NC 28557. Comments will he
accepted through December 15. 1998.
CHAPTER 3 - MARINE FISHERIES
SUBCHAPTER 3J - NETS, POTS, DREDGES,
AND OTHER FISHING DEVICES
SECTION .0100 - NET RULES, GENERAL
.0103 GILL NETS, SEINES, IDENTIFICATION,
RESTRICTIONS
(a) It is unlawful to use a gill net y\ith a mesh length less than
2''2 inches.
(b) The Fisheries Director may, by proclamation, limit or
prohibit the use of gill nets or seines in coastal yvaters, or any
portion thereof, or impose any or all of the following restrictions
on the use of gill nets or seines:
(1)
(2)
(3)
(4)
(5)
Specify' area.
Specify' season.
Specify gill net mesh length.
Specify means/methods.
Specify net number and length,
(c) It is unlawful to use fixed or stationai^ gill nets in the
Atlantic Ocean or any gill nets in internal coastal yvaters unless
such nets are marked by attaching to them at each end two
separate yellow buoys which shall be of solid foam or other solid
buoyant material no less than five inches in diameter and no less
than five inches in length. Gill nets which are not connected
13:8
NORTH CAROLINA REGISTER
October 15, 1998
739
TEMPORARY RULES
together at the top line shall be considered as indi\ idual nets.
requiring two buo\s at the end of each indi\ idual net. Gill nets
connected together at the top line shall be considered as a
continuous net requiring two buo>s at each end of the
continuous net. .Kn\ other marking buo\s on gill nets shall be
\ello\\ except that one additional identification buo\ of an>
color or an_\ combination of colors ma\ be used at either or both
ends. The owner shall al\\a\s be identified on a huo\ on each
end either b\ using engraved buo>s or b\ attaching engra\ed
metal or plastic tags to the buo\s. Such identification shall
include one of the following:
( 1 ) Owner's N.C. motor boat registration number, or
(2) Owner's L'.S. \essel documentation name, or
(3) Owner's last name and initials.
(d) It is unlawful to use gill nets:
( 1 ) \\ ithin 200 \ards of an\ pound net w ith lead and
pound or heart in use:
(2) From March I through October 3 1 in the Intracoastal
Water\\a> within 150 \ards of an\ railroad or
highwa\ bridge.
(e) It is unlawful to use gill nets within 100 feet either side of
the center line of the intracoastal Waterwa\ Channel south of
Quick Flasher No. 54 in .Alligator Ri\er atthe southern entrance
to the Intracoastal Waterwa\ to the South Carolina line, unless
such net is used in accordance w ith the follow ing conditions:
( 1) No more than two gill nets per boat ma\ be used at
an\ one time;
(2) An\ net used must be attended b\ the fisherman from
a boat who shall at no time be more than 100 \ards
from either net: and
(3) .An) individual setting such nets shall remo\e them.
v\hen necessap.. in sutTicient time to permit
unrestricted boat na\ igation.
(f) It is unlawful to use drift gill nets in \iolation of \5.\
NCAC 3 J .OIOU-1 and Paragraph (d) of this Rule.
(g) It is unlawful to use gill nets from Ma\ 1 through October
31 with a mesh length of less than fi\e inches in internal coastal
waters (including joint waters) unless attended. \n order to be
considered attended, the fishermen must be within 100 \ards of
an\ net emplo\ed b\ that fisherman.
Hisloiy Xote: Auihonty G.S. 113-134; 113-182; 113-221;
143B-289.52;
Efi: Jamian- 1 . 1991;
Amended Eff. August 1. 1998; March 1. 1996; March 1, 1994;
July 1. 1993; September 1. 1991.
TemporaiT Amendment Eff. October 22. 1998.
SL BCH.APTER 3M - FINFISH
SECTION .0500 - OTHER FINFISH
.0501 RED DRUM
(a) The Fisheries Director. ma\ b_\ proclamation, impose any
or all of the following restrictions on the taking of red drum:
( 1 ) Specif}, areas.
(2) Specify seasons.
(3) Specify quantity for fish taken b\ commercial gear.
(4) Specify means methods.
(5 ) Specify size for fish taken b\ commercial gear.
(b) It is unlawful to possess s e ll or offer for s al e red drum
greater than 27 inches total length.
(c) it is unlawful to remo\e red drum from an\ t\pe of net
with the aid of an_\ boat hook. gaff, spear, gig. or similar de\ ice.
(d) It is unlawful to possess red drum less than 1 8 inches total
length.
(e) It is unlawful to possess more than one -five red drum per
person per da\ taken b_\ hook-and-line. hook and lin e of which
no mor e than on e ma\ b e larger than 27 inch e s total l e ngth.
iX) ft is unlawful to possess more than 100 pounds of red
drum per \essel per day taken by commercial fishing equipment.
(g) The annual commercial quota (Januar\ through
December) for red drum js 250.000 pounds, if the quota js
projected to be taken, the Fisheries Director shall, by
proclamation, prohibit possession of red drum taken by
commercial fishing equipment.
HistoiySote: Authorit}- G.S. 113-134; 113-182; 113-221;
143B-289.52;
Ejf. Januaty 1 . 1991;
.Amended Eff. March 1. 1996; October 1. 1992; September 1.
1991;
Temporan .Amendment Eff. October 22. 1998.
740
SORTH CAROLINA REGISTER
October 15. 1998
13:8
RULES REVIEW COMMISSION
1 his Section contains the agenda for the next meeting of the Rules Review Commission on ThtirsJav. October 22. 1998.
I'): 00 a.m. , at 1307 Glemvood .Ave.. Assembly Room. Raleigh. NC. .Anyone wishing to submit written comment on any rule
before the Commission should submit those comments to the RRC staff, the agency, and the individual Commissioners by
Monday. October 19. 1998. M 5:00 p. m. Specific instructions and addresses may be obtained from the Rules Review
Commission at 919-733-2721. .Anyone Mishing to address the Commission should notify' the RRC staff and the agency at least
24 hours prior to the meeting.
RULES REV lEW COMMISSION MEMBERS
Appointed b\ Senate
Teresa L. Smalluood. Vice Chairman
Jim Funderburi<e
Vemice B. Howard
Philip O. Redwine
Da\ id Twiddy
Appointed by House
Paul Powell. Chairman
Anita White. 2"'^ Vice Chainnan
Mark Garside
Steve Rader
George Robinson
RULES REVIEW COMMISSION MEETING DATES
October 22. 1998
November 19. 1998
December 17, 1998
Januar\2]. 1999
.
MEETING DATE: SEPTEMBER 17, 1998
LOG OF FILINGS
RULES SUBMITTED: AUGUST 20, 1998 THROUGH SEPTEMBER 20, 1998
AGENCY/DIVISION RULE NAME
.
DEPARTMENT OF COMMERCE/BANKING COMMISSION
Name
Petitions
Notice
Hearings
Declaratory Rulings
Request for Hearing
Intervention of a New Part\
Subpoenas
Public Inspection of Files
Application
National Bank conversion
Establishment of Branches
Discontinuance
Conversion of Branch
Change of Location
Application
Examining Committee Report
Reports of Condition
Publisher's Copy
Oath of Directors
Depository Banks
Other Real Estate
Suspension of Investment
RULE CITATION
ACTION
4NCAC3A.0101
Amend
4NCAC3B.010I
Amend
4NCAC3B.0102
Amend
4NCAC3B.0103
Amend
4NCAC3B.0105
Amend
4 NCAC 3B .0203
Amend
4NCAC3B.0215
Amend
4 NCAC 3B .021 7
Amend
4 NCAC 3B .02 18
Amend
4 NCAC 3C .0101
Amend
4 NCAC 3C .01 11
Amend
4 NCAC 3C .0201
Amend
4 NCAC 3C .0202
Amend
4 NCAC 3C .0204
Amend
4 NCAC 3C .0301
Amend
4 NCAC 3C .0401
Amend
4 NCAC 3C .0701
Amend
4 NCAC 3C .0702
Amend
4NCAC3C .0703
Amend
4 NCAC 3C .0801
Amend
4 NCAC 3C .0802
Amend
4 NCAC 3C .0803
Amend
4 NCAC 3C .0804
Amend
13:8
NORTH CAROLINA REGISTER
October 15, 199H
741
RULES RE\ IE H COMMISSION
Limitations
Application
Examining Committee Report
Report of Trust Department
Application
Operation ofOtiier Business
Annual Report
Definitions
Regional Bank Holding Company
Bank Holding Company
Definitions
Definitions
Definitions
DHHS/MEDICAL CARE COMMISSION
Replacement Equipment
Applicability of Rules
Applicabilit\ of Rules
Cetrtificate of Need
Certificate of Need Review Schedule
Multi-Countv' Groupings
Ser\ice Areas
Reawilocations and Adjustments
Acute Care Bed Need Determination
Rehabilitation Bed Need Determination
Ambulatopv Surgical Facilities
Open Heart Surgers Services Need
Heart-Lung B\pass Machines
Fixed Cardiac Catheterization
Mobile Cardiac Catheterization
Bum intensive Care Services Need
Positron Emission Tomograph) Scanners
Bone Marrou Transplantation
Solid Organ Transplantation Services
Gamma Knife Need Determination
Lithotripter Need Determination
Radiation Oncology Need Determiantion
Nursing Care Bed Need
Demonstration Project
Home Health Agency Office
Dial_\sis Station Need
Hospice Need Determination
Hospice Inpatient Facility Bed Need
Psychiatric Bed Need
Chemical Dependencv Treatment
Intermediate Care Beds
Policies for General Acute Care
Policies for inpatient Rehabilitation
Policv for Ambulatory Surgical Facilities
Polic> for Pro\ision of Hospital
Policv for Nursing Care Beds
Policv for Detemiination of Need
Polic\ for Relocation
Polic) for Home Health Services
Policy for End-Stage Renal Disease
Policies for Psschiatric Inpatients
Policv fo Chemical Dependencv
Policies for intermediate Care
4NCAC3C .1502
Amend
4NCAC3D.0101
Amend
4NCAC3D.020I
Amend
4 NCAC 3D .0202
Amend
4NCAC3E.0101
Amend
4NCAC3E .0201
Amend
4 NCAC 3E .0302
Amend
4 NCAC 3F. 0201
Amend
4 NCAC 3 H .0002
Amend
4NCAC3H .0003
Amend
4NCAC3i.0i0i
Amend
4NCAC3J.010i
Amend
4 NCAC 3K .0101
Amend
10 NCAC 3R .0214
Amend
10 NCAC 3R .3051
Amend
10 NCAC 3R .6101
Adopt
10 NCAC 3R. 6102
Adopt
10 NCAC 3R .6103
Adopt
10 NCAC 3R. 6104
Adopt
10 NCAC 3 R .6105
Adopt
10 NCAC 3R. 6106
Adopt
10 NCAC 3R. 6107
Adopt
10 NCAC 3R. 6108
Adopt
10NCAC3R.6I0Q
Adopt
10NCAC3R.6110
Adopt
10NCAC3R.61il
Adopt
10 NCAC 3R. 61 12
Adopt
IONCAC3R.61i3
Adopt
10 NCAC 3R .6114
Adopt
10 NCAC 3R .61 15
Adopt
10NCAC3R.61I6
Adopt
I0NCAC3R.6117
Adopt
I0NCAC3R .6118
Adopt
10NCAC3R.6119
Adopt
10 NCAC 3R .6120
Adopt
10NCAC3R.6121
Adopt
10 NCAC 3R .6122
Adopt
10 NCAC 3R .6123
Adopt
10 NCAC 3R .6124
Adopt
10 NCAC 3R .6125
Adopt
10 NCAC 3R .6126
Adopt
10NCAC3R.6127
Adopt
10 NCAC 3R .6128
Adopt
10 NCAC 3R .6129
Adopt
10 NCAC 3R .6130
Adopt
10 NCAC 3R .6131
Adopt
10 NCAC 3R .6132
Adopt
10NCAC3R.6133
Adopt
10 NCAC 3R .6134
Adopt
10NCAC3R.6135
Adopt
10 NCAC 3R .6136
Adopt
10NCAC3R.6137
Adopt
10 NCAC 3R .6138
Adopt
I0NCAC3R.6139
Adopt
10 NCAC 3R .6140
Adopt
10 NCAC 3R .6141
Adopt
742
NORTH CAROLINA REGISTER
October 15, 1998
13:8
RULES REVIEW COMMISSION
DHHS/SOCIAL SERVICES COMMISSION
Advisor) to Counties
DHHS/DIVISION OF MEDICAL ASSISTANCE
Home Health Services
10NCAC24A .0508
Adopt
I0NCAC26B.0103 Amend
DHHS/SOCIAL SERVICES COMMISSION
Tine License
Termination of License
Denial and Revocation of License
Administrative Penaltx
Nature and Purpose of State Adult Day Care
10NCAC42C .3401 Amend
10NCAC42C .3403 Amend
10NCAC42C.3404 Amend
10NCAC42C.360I Amend
10NCAC42R.020I Amend
DHHS/SECRETARV OF DHHS
Two-Parent Families
JUSTICE/CRIMINAL JUSTICE EDUCATION & TRAINING STANDARDS
Location
Definitions
Minimum Standards
Basic Trianing-LEO
Criminal Justice Instructor Training
Radar Instructor Training
Radar Instructor Training
Criminal Justice TD/SMI Instructor
Criminal Justice TD/SMI Instructor
Certification Training
Certification Training
Certification Training
Certification Training
Certification Training
Certification Training
Supplemental Training
Re-Certification Training
Re-Certification Training
Re-Certification Course
Re-Certification Course
Re-Certification Course
Specialized Instructor Training
Specialized Instructor Training
Specialized Instructor Training
Specialized Instructor Training
Certification of Instructors
Radar and TD Speed Measurement
Terms and Conditions
Certified Instructors
Trainee Attendance
Comprehensive Written Exam
Satisfaction of Minimum Training
Comprehensive Written Exam
Satisfaction of Minimum Training
Levels of Approval
Instrument Operators Certification
Approved Speed-Measuring Instruments
Minimum Training Specifications
In-Service Firearms
Filing and Fees
10NCAC49B.03I5
Adopt
COMMISSION
I2NCAC9A
.0101
Amend
12NCAC9A
.0103
Amend
I2NCAC9B
.0101
Amend
12NCAC9B
.0205
Amend
I2NCAC9B
.0209
Amend
12NCAC9B
.0210
Amend
I2NCAC9B
.0210
Amend
12NCAC9B
.0211
Amend
I2NCAC9B
.0211
Amend
I2NCAC9B
.0212
Amend
12NCAC9B
.0212
Amend
I2NCAC9B
.0213
Amend
I2NCAC9B
.0213
Amend
12NCAC9B
.0214
Amend
I2NCAC9B
.0214
Amend
12NCAC9B
.0215
Amend
12NCAC9B
.0218
Amend
I2NCAC9B
.0219
Amend
I2NCAC9B
.0220
Amend
I2NCAC9B
.0221
Amend
I2NCAC9B
.0222
Amend
I2NCAC9B
.0226
Amend
I2NCAC9B
.0227
Amend
I2NCAC9B
.0232
Amend
I2NCAC9B
.0233
Amend
I2NCAC9B
.0301
Amend
12NCAC9B
.0309
Amend
12NCAC9B
.0310
Amend
12NCAC9B
.0311
Amend
12NCAC9B
.0404
Amend
I2NCAC9B
.0408
Amend
I2NCAC9B
.0409
Amend
12NCAC9B
.0414
Amend
12NCAC9B
.0416
Amend
12NCAC9B
.0603
Amend
12NCAC9C
.0308
Amend
I2NCAC9C
.0601
Amend
I2NCAC9E
.0105
Amend
I2NCAC9E
.0106
Amend
12NCAC9F
0107
Amend
13:8
NORTH CAROLINA REGISTER
October 15, 1998
743
RILES REVIEW COM MISS I OS
DENR/SOIL AND WATER CONSERVATION COMMISSION
Cost Share
DENRAVILDLIFE RESOURCES COMMISSION
General Provisions
DENR/COMMISSION FOR HEALTH SERVICES
General
Eligible Migrants
Authorization
DENR/COMMISSION FOR HEALTH SER\ ICES
Definitions
Sew age S\ stems
Design Details
Di\ ing Equipment
Circulation S_\stem
Decks
Dressing & Sanitan. Facilities
Fences
Safety Pro\ isions
Wading Pools
Spas and Hot Tubs
Water Oualit> Standards
Maintenance and Operation
Suction Hazard Reduction
Water Recreation Attractions
Definitions
Appro\al of Construction Plans
Inspections and Reports
Food Supplies
Food Ser\ ice
Specitlcations for Kitchens
Manual Cleaning
Mechanical Cleaning
Water SuppK
Toilets
Diapering and Diaper Changing
Storage
Furniture and Ton s
Personnel
Floors
Walls and Ceilings
Communicable Diseases
Handwashing
Wastewater
Solid Wastes
Animal and Vemiin Control
Outdoor Areas
Sw imming and Wading Pools
Compliance
DENR/COMMISSION FOR HEALTH SERVICES
General
Definitions
Authorizations
Reimbursement
Reimbursement
5NCAC6E.0105 Amend
5NCAC 1 OF .0301 Amend
5NCAC 16A.010I Amend
5NCAC 16A .0106 Amend
5NCAC 16A.0108 Repeal
5NCAC 18A
.2508
Amend
5NCAC ISA
.2513
Amend
5NCAC 18A
.2515
.Amend
5NCAC 18A
.2517
.Amend
5NCAC 18A
.25 1 8
Amend
5NCAC 18A
.2522
Amend
5NCAC 18A
.2526
Amend
5NCAC 18A
.2528
Amend
5NCAC 18A
.2530
Amend
5NCAC 18A
.253 1
Amend
5NCAC 18A
.2532
Amend
5NCAC 18A
.2535
Amend
5NCAC 18A
.2537
Amend
5ANCAC 18A.2539
Amend
5ANCAC 18A.2543
Adopt
5NCAC 18A
.2801
Amend
5 NCAC 1 8A
.2802
Amend
5NCAC 18A
.2803
Amend
5 NCAC 18A
.2804
Amend
5 NCAC 1 8A
.2808
Amend
5 NCAC 18A
.2810
Amend
5 NCAC ISA
.2812
Amend
5 NCAC ISA
.2813
Amend
5 NCAC 18A
.2815
Amend
5 NCAC 1 8A
.2817
Amend
5 NCAC 1 8A
.2819
Amend
5 NCAC 18A
.2820
Amend
5 NCAC 18A
.2822
Amend
5 NCAC 1 8A
.2823
Amend
5 NCAC 1 8A
.2824
Amend
5 NCAC 18A
.2825
Amend
5 NCAC 1 8A
.2827
.Amend
5 NCAC 18A
.2828
Amend
5 NCAC ISA
.2829
Amend
5 NCAC ISA
.2830
Amend
5 NCAC ISA
.2831
Amend
5 NCAC ISA
.2832
Amend
5 NCAC 1 SA
.2833
Amend
5 NCAC ISA
.2834
Amend
5 NCAC 24A
0101
.Amend
5 NCAC 24A
0102
Amend
5 NCAC 24A
0302
Amend
5 NCAC 24A
0402
Amend
5 NCAC 24A
0403
Amend
744
NORTH CAROLISA REGISTER
October 15, 1998
13:8
RULES REVIEW COMMISSION
Reimbursement
15NCAC24A .0404 Amend
STATE BOARDS/NC MEDICAL BOARD
Annual Registration
21 NCAC32F.0003
Adopt
RULES REVIEW COMMISSION
September 17, 1998
MINUTES
The Rules Review Commission met on September 17. 1998. in the Assembly Room of the Methodist Building. 1307 Glenwood
Avenue. Raleigh. North Carolina. Commissioners in attendance were Chaimian Paul Powell. Teresa L. SmalKvood. Stephen P. Rader,
George S. Robinson, David R. Twiddy. Vernice B. Howard. Jim R. Funderburk. Anita A. White, and Mark P. Garside.
Staff members present v\ere: Joseph J. DeLuca. Staff Director; Bobby Bryan. Rules Review Specialist; and Sandy Webster
The following people attended:
Valerie Chaffm
Bud McCarty
Jill Burton
Linda Culpepper
Bill Breeze
Emilv Lee
Dedra Alston
Dee Williams
Jackie Sheppard
Mark Sisak
Jessica Gill
Jennie Dorsett
Hunton & Williams
DENR/Hazardous Waste
DENR/Hazardous Waste
DENR/Hazardous Waste
N C Medical Board/ Athletic Trainers
Transportation
DENR
Cosmetic Art Examiners
DHHS/DFS
State Budget
DENR/DCM
Athletic Trainers
APPROVAL OF MINUTES
The meeting was called to order at 10:02 a.m. with Chairman Powell presiding. He asked for any discussion, comments, or
corrections concerning the minutes of the August 20. 1998 meeting. There being none, the minutes were approved.
LOG OF FILINGS
Chairman Powell presided over the review of the log and all rules were unanimously approved with the following exceptions:
12 NCAC 1 1 .0501 : JLISTICE/NC Alarm Sv stems Licensing Board - The Commission objected to this rule due to lack of necessity.
There are no requirements or authorizations in .0501 and it is thus unnecessary.
12 NCAC 1 1 .0502: JUSTICE "NC Alann Sv stems Licensing Board - The Commission objected to this rule due to lack of necessity.
The tenn "accredited sponsor" is not used in these rules so the definition in .0502 is unnecessary.
12 NCAC 1 1 .0504: JUSTICE 'NC Alann Systems Licensing Board - The Commission objected to this rule due to lack of statutory
authority and ambiguity. There is no authority cited for the board to set occupational qualifications for instructors, thus there is no
authoritv to inquire into the qualifications in .0504(a)(4) or detemiine their competency in (b)(2). It is also not clear what would
constitute competency. In .0504(c). it is not clear what standards the full board will use in determining if a course will be sanctioned.
12 NCAC 1 1 .0505: JUSTICE/NC Alami Systems Licensing Board - The Commission objected to this rule due to ambiguity. In
.0505. it is not clear what standards the board will use in determining if out of state courses will be sanctioned.
14A NCAC 7 .03 13: DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY - The Commission objected to this rule due
to ambiguity. It is not clear what standards the Governor's Crime Commission is to use in detennining matching fund ratios.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
745
RULES REIIEU COMMISSION
15A NCAC 7H .1705; DENR Coastal Resources Commission - The Commission objected to this mledueto ambiguit>. In (c)(1)(C).
it is not clear what standards will be used in allowing dredging for fill material to protect highwa\s or other structures of public
interest. It is also not clear what is meant b\ "structures of public interest." This objection applies to existing language in the rule.
15A NCAC 13B .1624: DENR Commission for Health Ser\ices - The Commission objected to this rule due to ambiguity. In
(b)( 1 )(A). it is not clear what will make a model "acceptable to the Di\ision." in (b)( 1 )(.A)(i\ ). it is not clear what will make a "two-
phase modeling approach" be acceptable to the Division, in (b)(4). it is not clear what standards the Dis ision w ill use in appro\ ing
materials for separation materials. In (b|(7). it is not clear what constitutes "adequate!} specified." In (b)(7)(A). it is not clear what
constitutes "adequate!) free of organic material." It is also not clear when a "select till" will be app"0\ed b\ the Di\ision. In
(b)(7)(B)(i). it is not clear what standards the Di\ ision will use in approving grading plans and specitlcations. In (b)(7)(C) (i). it is
not clear what standards the Division will use in approving engineering plans. In (b)(7)(C)(iii). it is not clear what standards the
Division will use in approving plans, in (b)(8)(B)(i). it is not clear what standards the Division vsil! use in approv ing an alternative
"in situ test." In (b)(S)(B)(v ). it is not clear what constitutes adequate protection from environmental degradation. In (b)(8)(CKii).
it is not clear what standards the Division will use in approving tests. In (b)(9)(B)(ii). it is not clear what standards the Division will
use in approving placing materials on top of the GCL. In (iii). it is not clear what standards the Division will use in approving
removing, repairing, and replacing material. In (b)(9)(C)(i). it is not clear what standards the Division will use in approving
geosvnthetic clav installation. In ( ii). it is not clear what standards will be used in approving the placement of materials. In (v ). it
is not clear what standards will be used in approving retesting. In (v )(111). it is not clear what standards the Division will use in
approving engineering plans. In (b)( 10)(C). it is not clear what standards will be used in approving retesting. In (b)( 1 1 )(B)(i). it is
not clear what standards will be used in approving the installation of leachate collection piping. In (b)( 1 1 )(C). it is not clear what
standards will be used in approving retesting. In (b)(12)(B)(i). it is not clear what standards the Division will use in approving
placement of drainage lav er material. In (b)(12)(C). it is not clear what standards v\ill be used in approving retesting. in (b)( 13)(B).
it is not clear what standards will be used in approving the installation of filter lavers. In (b)( 13)(C). it is not clear what standards
will be used in approving retesting. This objection applies to existing language in the rule.
19.A NCAC 2D .0816: TR.ANSPORTATION Division of Highways - The Commission objected to this rule due to lack of statutorv
authoritv. There is no authoritv for the Department to disqi 'it\ a contractor from bidding because of the recruitment of department
emplovees for employment as the rule does in (a)(6).
DIRECTOR'S REPORT
Commissioner Funderburk made a motion that the election of officers be postponed until November and reviewed again at that time
if new Commissioners have not been appointed. Commissioner Rader seconded the motion, although he did note that elections could
be held if the new commissioners were in place. The vote was unanimous. The meeting next month is a change from the third
Thursdav to the fourth Thursdav. .A proposed budget is being prepared for 1 999-2000. Our lease should remain the same for at least
next _v ear.
COMMISSION PROCEDURES AND OTHER M.ATTERS
The next meeting will be on October 22. 1998.
The meeting adjourned at 10:38 a.m.
Respectfullv submitted.
Sandv Webster
746 SORTH CAROLINA REGISTER October 15, 1998 13:8
CONTESTED CASE DECISIONS
1 his Section contains tin: full text oj some of the more significant Administrative Law Judge decisions along with an index
to all recent contested cases decisions which are filed under North Carolina's Administrative Procedure Act. Copies of the
decisions listed in the index and not published are available upon request for a minimal charge by contacting the Office of
Administrative Hearings. (919) ^33-2698. Also, the Contested Case Decisions are available on the Internet at the following
address: http://www.state.nc.iis/OAH hearings/ decision/caseindex. htm.
OFFICE OF ADMINISTRATIVE HEARINGS
Chief Administrative Law Judge
JULIAN MANN, III
Senior Administrative Law Judge
FREDG. MORRISON JR.
ADMIMSTRATU E LAW JUDGES
Brenda B. Becton
Sammie Chess Jr.
Beecher R. Gray
Melissa Owens
Meg Scott Phipps
Robert Roosevelt ReilK Jr.
Dolores O. Smith
AGENCY
ALCOHOLIC BE\ ERAGE f ONTROL COMMISSIO^
Alcoholic Beverage Control Commission \ Kenneth .lerome
Alcoholic Beverage Control Commission v .lesse .iacob Josner. Jr
Alcoholic Beverage Control Commission v Trade Oil Compans. Inc
Alcoholic Beverage Control Comm \ Partnership T/A C & .I's Shipureck
Alcoholic Beverage Control Commission v Axis Entertainment
Sokha lliior Ramadneh \ Alcoholic Beverage Control Commission
Alcoholic Beverage Control Commission \ Delores Williams AInaqib
Alcoholic Beverage Control Commission \ Axis Entertainment
Alcoholic Beverage Control Commission v James Aubre\ Stephenson
Alcoholic Beverage Control Commission \ Bndgette Dee Williams
Alcoholic Beverage Control Commission \ Robert Lee. Inc
Tarus Jackson \ Alcoholic Bexerage Control Commission
CASE
NLMBER
97 ABC
97 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
98 ABC
1 205
1438
003.3
0290
0357'
0382
0392
0401*
0494
050 1
0518
0768
ALJ
Phipps
Phipps
Reilly
Morrison
Reilly
Smith
Chess
ReilK
Chess
Reilly
Gray
Smith
DATE OF
PI BLISHED DECISION
DECISION
REGISTER CITATION
07/23/98
06/19/98
08/21/98
08/19/98
07/02/98
06/30/98
13 03 NCR 350
07/30/98
07/02/98
09/01/98
08/11/98
08/11/98
07/13/98
BOARD OF CONTRACTORS
Heritage Pomte Builders. Inc & Patrick Hannon \ Bd ot'Contractors
97 LBC 0243
Phipps
C RIME CONTROL AND PI BLIC SAFETY
Loretta Battle \ Crime Victims Compensation Commission 97 CPS 0654 Gray
C\nthia Austin \ Crime Victims Compensation Commission 97 CPS 1499 ReilK
Marcella Skaggs v Crime Victims Compensation Commission 98 CPS 0065 Owens
Talmadge E McHenr\ \ Crime Victims Compensation Commission 98 CPS 01 16 Gray
1-inda Caldwell Wiggins v Crime Victims Compensation Commission 98 CPS 0153 Chess
Kenneth? L\lle v Crime Victims Compensation Commission 98 CPS 0176 Reilly
Shirley Henr> hand \ Crime Victims Compensation Commission 98 CPS 0263 Morrison
Brenda Jean Thomas v Crime Victims Compensation Commission 98 CPS 0314 Morrison
lareylon E Johnson v Crime Victims Compensation Commission 98 CPS 0327 ReilK
Mia Thompson-Clark v Crime Victims Compensation Commission 98 CPS 0349 Chess
FayeE Powell v Crime Victims Compensation Commission 98 CPS 0808 Owens
Shirley P Chen \ Crime Victims Compensation Commission 98 CPS 1015 Phipps
ENMRONMENT AND NATl RAL RESOl R( ES
Ladane Williamson and Odell Decarol Williamsons DENR 96EHR1926 Gray
Teresa Hellin \ Department of Environment and Natural Resources 97 EHR 0409 Morrison
Ronald Prater v Department of Environment and Natural Resources 97 EHR 0451 Reilly
08/17/98
08/10/98
08/12/98
06/05/98
06/24/98
08/27/98
07/06/98
08/11/98
08/11/98
09/02/98
05/14/98
08/28/98
09/17/98
09/01/98
07/29/98
07/02/98
13:05 NCR 533
13:07 NCR 609
13:8
NORTH CAROLINA REGISTER
October 15, 1998
747
CONTESTED CASE DECISIONS
\GE\C\
James F Smith \ Depanmcnt ortn\ironmi:nl and Natural Resources
Hickori Alliance \ Deparlinent of hn\ ironment and Natural Resources
and
Godfre\ Lumber Compan\. Inc
John M Silvia v Department of Environment and Natural Resources
Godfres Lumber Companv, Inc v Dept /tnvironment & Natural Resources
and
Hickorv Alliance
Gregors B Jackson, Brenda R Jackson \ Greene Cu HIth Dept . ENR
Robert G Goff. Sr \ Department of Ln\ ironment and Natural Resources
Scotland Water. Cedar Circle v Enxironment and Natural Resources
Eric Glenn Harrison \ Environment and Natural Resources
Robert G GotV. Sr v Department of fn\ ironment and Natural Resources
Division of Emironmenliil ManagemeiU
Save Our Ri\crs Inc . el al \ Town of Highlands. i^HNR. Ln\ Mgmt .
William W Cobev. Jr . Secretap.
US Dept of the Interior Nat'l ParkS\ce \ Ln\ironmental .Mgmt Comm
CASE
DATE OF
M MBKR
ALJ
DECISION
97EHR I3b5
Chess
07/17/98
97EHR 1607
Reilly
07/17/98
97EHR 1646
Chess
06/03/98
97EHR 1676
ReilK
07/17/98
9S EHR 0042
Reillv
07/02/98
98 EHR 0072*=
Gray
06/25/98
98 EHR 0236
Smith
06/09/98
98 EHR 0.i73
ReilK
08/28/98
98 EHR 0448*-
Gray
06/25/98
91 EHR 0377
Gra\
07/30/98
98 EHR 0410
Smith
08/20/98
PI BLISHED DECISION
KEGIS1 ER CITATION
13 06 NCR 578
Division of Marine Fislwries
Lad\ LaShanda MeUiii Br\anl \ EHNR Dnision of Marine Fisheries 97 EHR 1459
Grav
07/20/98
Division of Solid ii (isle Management
Ste\e .Mdridge. et al \ DLNR. DiMsion of Solid Waste Management
Division of I) ater Quality
Raymond L Manin \ DENR, Division of Water Quality
Worslev Oil Companies. Inc v DENR. DW'O. Groundwater Section
Silver Bullet. Inc v DENR. Division of Water Quality
HEALTH AND HI MAN SER\ ICES
Stanle> C- Ochulo V Of Administrative Hearings. Mr R Marcus 1 odge
Oliver C Johnson. Haze. Johnsons Health and Human Services
Louise Streater \ Health and Human Serv ices
Richard E Lawrence. Rebecca A Lawrence \ Health and Human Senices
John David Brinson \ Department of Human Resources
Stephanie Wade v Department of Health and Human Services
CaroKn L Freeman \ Department of Human Resources
Otis L Mack. Jr \ OlTice of .Administrative Hearings
Christopher Germano. Lee Germano v Department of Health
Division of Child Development
Dulatown Presbvlerian Children's Ctr \ DHHS. Child Development
Cassandra Mvers \ Division of Child Development
Dora's Child Development Center v Mecklenburg Ct> DSS. and DHR
Division of Facility Services
Pearlie W Lawson v DHHS. Facility Svcs . Health Care Personnel Reg
Annie K Morgan v Health & Human Services . Facility Services
Mooresville Hospital Mgmt .Associates. Inc d/b/a Lake Nonnan Regional
Medical Center v DHR. Facility Services. Certificate of Need Section
and
.Autumn Corporation and McRinlev V Jurnev
Warren Moore & Catherine Moore v DHR. Div of Facility Services
Constellation Health Services. Inc and Constellation Senior Services.
Inc \ DHR. Facilitv Services. Group Care licensure Section
and
Diversified Health Group. L L C and The Innovative Health Cjroup. Inc
Dialysis Care of NC. LLC. d/b/a Dialysis Care of Rowan Countv
V DHR. Division of Facility Services. Certificate ofNeed Section
V Biomedical Applications of NC. Inc d/b/a BMA of Kannapolis d/b/a
Metrolina Kidney Center of Kannapolis (Lessee) and Metrolina Nephrology
Associates. P.A (Lessor)
Robin Annerte Reavis v Health and Human Svcs . Div of Facility Svcs
Jennifer Blofeld v DHHS. Facility Svcs , Health Care Personnel Registrv
Sunlite Retirement Home. Winnie Jane Johnson v DHR. Facility Services
Helen Shokoti v Health and Human Sen ices. Div of Facility Services
Ann Dav IS Rest Home v Group Care Licensure Section
Diane Lingard v DHR. Facility Svcs. Health Care Personnel Reg
Kimherlv .Annette Smith Hull v DHHS. Division of Facility Services
Deborah .Ann Holt v DHHS. Division of Facility Services
Tern Michelle Tvler v Health & Human Svcs. Div of Facility Services
Dons Jones Holmes v DHHS. Facilitv Svcs. Health Care Personnel Reg
Annie K Morsan v Health & Human Services . Facilitv Services
98 EHR 0665
Chess
09/09/98
98 EHR 0590
Grav
09/21/98
98 EHR 0735
Chess
08/24/98
98 EHR 0931
Chess
08/20/98
98 DHR 002 1
Reillv
06/24/98
98 DHR O090
Grav
07/08/98
98 DHR 0196
tirav
06/03/98
98 DHR 0209
Phipps
07/15/98
98 DHR 0369
Owens
08/17/98
98 DHR 0666
Reillv
08/19/98
98 DHR 0721
Grav
08/05/98
98 DHR 0729
Phipps
09/09/98
98 DHR 0780
Owens
07/28/98
98 DHR 0654
Grav
08/06/98
98 DHR 0948
Owens
09/03/98
98 DHR 1 1 84
Phipps
09/25/98
97 DHR 1034
Becton
07/30/98
97 DHR 1046*'
Phipps
07;23/98
97 DHR 1209
Reillv
06/23/98
1 3 07 NCR 617
97 DHR 12^9
97 DHR 1529
97 DHR 1588
Mann
Grav
Phipps
09/08/98
06/24/98
08/31/98
97 DHR 1672
Reillv
08/12/98
98 DHR 0096
tirav
08/21/98
98 DHR 0124
Phipps
06/11/98
98 DHR 01 73
Chess
08/26/98
98 DHR 0197
Phipps
06/23/98
98 DHR 0214
Becton
(J6/22/98
98 DHR 0239
Phipps
06/23/98
98 DHR 0348
Phipps
06/22/98
98 DHR 0458
Grav
08/21/98
98 DHR 0463
Grav
08/21/98
98 DHR 0496*'
Phipps
07/23/98
748
NORTH CAROLINA REGISTER
October 15, 1998
13:8
CONTESTED CASE DECISIONS
AGENCY
Johnnie E V\illiams\ DHHS. Division of Facilit\ Services
Traces Deirde Galloua\ \ DHHS. Facilin S\cs . Health Care Per Reg
CASE
DATE OF
MMBER
AIJ
DECISION
98 DHR 0639
ReilK
07/02/98
98 DHR 0824
Grav
09/24/98
PI BUSHED DECISION
REGISTER CITATION
Division of Medical Assistance
Cliarlotte-Mecklenbiirg Hospital Authont\, d/b/aCarolinas Medical Ctr.
and HaiT\ Mahannah. M D v DHHS. Division of Medical Assistance
97 DHR 062 1
Smith
07/08/98
Division ofSociai Services
William & Cr\stal Steakle\ v DHHS. Di\ ision of Social Services
Raji Abdus-Salaam \ Department of Human Resources. DSS-DCA
Child Support Enfoicement Section
Domian E Drake \ Department of Human Resources
Robert Alan Da\is \ Department of Human Resources
Michael W V\hitev Depanment of Human Resources
Tro\ R Emmons. Jr \ Department of Human Resources
Man in A Pike v Department of Human Resources
Mar\ Putnam .Axepi \ DSS. Durham Count\ Child Support Enforcement
Dale W Hutchinson X Department of Human Resources
.letTen. Lee Graves v Department of Human Resources
Donald L Carr. Jr \ Depanment of Human Resources
Marvin Diggs \ Department of Human Resources
Michael Patrick D\me v Department of Health & Human Sen ices
Dennis Lee McNeill \ Department of Human Resources
B\ron O Ashh> II \ Department of Human Resources
Hubert L Morrison \ Depanment of Human Resources
Roben Alan Davis v Depanment of Human Resources
Danvl C. Thompson \ Depanment of Health & Human Sen ices
Darnl C Thompson v Depanment of Health & Human Sen ices
Michael Anthon\ Hill \ Depanment of Human Resources
Michael A Wilder \ Depanment of Human Resources
Bill\ Anthon\ Jr \ Department of Human Resources
.Alton D Bagles \ Department of Human Resources
Bemel B Berrv Jr \ Department of Human Resources
Darnl Simpkins v Department of Health & Human Sen ices
.Anthony Montgomers \ Department of Human Resources
Tern Letterman \ Department of Human Resources
William E Mines V Depanment of Human Resources
.Annette Chipman \ Depanment of Human Resources
Paul J Moble>-Jr\ Depanment of Human Resources
Robert A Shererx Department of Human Resources
Gregor. Andre Brown \ Department of Health & Human Sen ices
Rodger Hazen II \ Depanment of Human Resources
Wade .A Burgess \ Department of Human Resources
Robert L Robinson \ Depanment of Human Resources
Jamie A Hi -it v. Department of Health & Human Senices
Renardo Jc. . ins v Department of Human Resources
Anthonx Love v Department of Human Resources
Steven Kent Gold v Department of Human Resources
Leros J Poole \ Department of Human Resources
HovalA McLean v Department of Health & Human Senices
Michael Bernard Hill \ Depanment of Health & Human Senices
Charlie RatlilTJr v Department of Health & Human Senices
John B Hall V Department of Human Resources
Demck A Brinton \ Department of Human Resources
Tabatha D Pate v Department of Human Resources
.Amanda F Blount \ Department of Human Resources
Gregory Carty (IV #1564206) \ Department of Human Resources
Gregor> Cany (IV #1.S64I66) v Department of Human Resources
John L Bullard \ Department of Human Resources
Charlie Gray HuntJr v Depanment of Human Resources
Willie R Cruse \ Depanment of Health & Human Sen ices
Thomas H Lotze. Jr \ Depanment of Health & Human Senices
Robert L Williams v Department of Human Resources
Patrick Bass v Depanment of Health & Human Senices
Timothy Kinney \ Department of Health &. Human Senices
Teresa L Galloway v Department of Health & Human Sen'ices
Michael .\ Looper v Depanment of Health & Human Senices
Kenneth E Strickland v Department of Health & Human Senices
Ho\t H Bunt Jr \ Department of Health & Human Sen ices
\'emon Reginald Pmkney \ Depanment of Health & Human Senices
Elijah G Deans \ Department of Health & Human Sen ices
James Houard Alexander \ Depanment of Health & Human Senices
Lee J Coggins V Depanment of Human Resources
98 DHR 0076
98 DHR 0771
96CRA
96CRA
96CRA
96 CRA
96CRA
96 CRA
96 CRA
98 CRA
98 CRA
98 CRA
98 CRA
96CSE
96CSE
96CSE
96CSE
96CSE
96CSE
96CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
97CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
98CSE
1717
1781*"
1784
1798
1814
1849
1981
0137
054.5
0588
0787
1305
1435
1649
1780*"
1854*"
1902*"
2028
1301
1 393
1424
1435
1436
1442
1492
1527
1 545
1568
1605
1656
1666
0071
0130
0307
0310
0312
0333
0375
0420
0421
0449
0506
0555
0556
0560
056l»"
0562*"
0569
0607
0653
0658
0682
0689
0728
0769
0783
0817
0818
0833
0867
0869
0894
Gray
Ouens
Smith
Phipps
Gra\
ReilK
Chess
Momson
Mann
Becton
Reillv
Reilh
Gray
Gray
Mann
Reilly
Phipps
Chess
Chess
Mann
Chess
Reilly
Chess
Smith
Chess
Phipps
Smith
Mann
Phipps
Phipps
Mann
Gray
Chess
Momson
Reilly
Momson
Smith
Phipps
Momson
Reilly
Smith
Becton
Mann
Chess
Smith
Becton
Chess
Phipps
Phipps
Momson
Smith
Mann
Phipps
Smith
Ov\ens
Smith
Becton
Chess
Mann
Momson
Owens
Phipps
Reilly
Smith
07/20/98
07/30/98
08/25/98
08/20/98
09/25/98
08/25/98
09/24/98
09/01/98
08/26/98
06/23/98
06/08/98
06/24/98
09/17/98
06/22/98
07/15/98
08/12/98
08/20/98
09/01/98
09/01/98
08/26/98
07/17/98
06/24/98
06/02/98
06/12/98
08/11/98
06/17/98
06/22/98
09/08/98
07/23/98
06/17/98
07/1-5/98
08/27/98
07/17/98
06/12/98
07/15/98
07/06/98
06/23/98
06/23/98
07/01/98
07/02/98
07/29/98
07/15/98
07/15/98
07/20/98
08/07/98
06/23/98
07/29/98
09/23/98
09/23/98
08/06/98
06/22/98
08/26/98
08/31/98
06/22/98
09/18/98
09/17/98
07/30/98
09/08/98
09/08/98
09/15/98
07/29/98
07/20/98
08/06/98
08/20/98
13:8
NORTH CAROLINA REGISTER
October 15, 1998
749
CONTESTED CASE DECISIONS
AGENO
Mark J Hoiilbrook \ Depanmeni ot' Health & Human Sen Ices
Henp. A Hamel. Jr \ Departmem of Heallh & Human Senices
Deniira Jeffries \ Depanment of Healih & Human Sen ices
Vickie E Lane \ Michael L Adams. Department of Human Resources
Rachel D- Farmer \ Depanment of 1 lealih & Human Sen ices
Janice Scott Padgett (Fisher) \ Department of Human Resources
Barbara Fanta-Blandine \ Depanment ol Human Resources
Sharon Brim x Depanment of Health & Human Sen ices
Tenia M Sharpe \ Depanment of Human Resources
Ruth McFadden \ Depanment of Human Resources
Division of U omen's nntl Cliililren's Ht'olllt
Khamis A Sirhan \ DHHS. Women's Children's Health. Nutrition Svcs
Joseph A Nauas \ DHHS. Women's Children's Health. Nutrition S\cs
Jl STICE
James Todd Tippet \ NC Compan> Police Program
Alarm Systems Licensing Board
Claude Da\id Huggins \ .-Xlarm S\ stems Licensing Board
Auctioneer Licensing Ronrcl
WilevR T\ndall\ .Auctioneer Licensing Board
Education and Training Standards Division
Thomas D«a\ne Brown \ Sheriffs' Fducation & Training Si....jards Comm
Kenneth Joseph Jackson \ Sheriffs' Education & Training Standards Comm
Odis Fitzgerald Darden \ ShentTs' Education & Training Standards Comm
Hosle Kenneth Wise. Jr \ ShentTs' Education &. Training Standards Comm
Hearl CKendine \ Criminal Justice Education & Training Stds Comm
James Farrell Roberts \ Cnminal Justice Education & Training Stds Comm
Phillip F "ith McPherson \ ShentTs' Education & Training Standards Comm
Dar\ILa. rBrNantx ShentTs' Education & Training Standards Comm
Harold F Esters \ ShentTs' Education & Training Standards Comm
William Scott Ke\ \ ShentTs' Education & Training Standards Comm
Amado Martinez \ Criminal Justice Education & Training Stds Comm
Johnn\ VVasne Wills \ Criminal Justice Education & Training Stds Comm
James E Ellerbe \ ShentTs' Education & Training Standards Comm
Paul Han e> Ta> lor \ DOJ. Cnminal Justice Ed & Training Stds Comm
Kenneth Joseph Jackson \ ShentTs' Education & Training Standards Comm
Robert R\an Hardison \ ShentTs' Education & Training Standards Comm
Traces Jerome Clark \ Shenffs' Education & Training Standards Comm
Ke\ in Lamar Dorse\ \ ShentTs' Education & Training Standards Comm
Private Protective Services Board
Claims \'enllcation. Inc \ Pri\ate Protectne Sen ices Board
Walter R Shirer \ Pri\ ate Protectne Sen ices Board
Staces L Williams \ Pn\ ate Protective Sen ices Board
Eugene Norman Garrett \ Prnate Protectne Sen ices Board
Dann\ Charles Garrett \ Prnate Protects e Sen ices Board
.Alfred D Malson \ Pn\ ate Protective Sen ices Board
Melvin Eugene Davis \ Prixate Protectne Sen ices Board
BOARD OF MEDIC AL EXAMINERS
Joe D Crawford. M D \ Medical Bd ofNC Bd of Medical Examiners
PI BLIC INSTRl C TION
George & Ruth Sinclair for .Adam Sinclair \ Wake Count\ Schools
(Special Education Sen ices I
Nicholas Eirschele. B\ and Through! Flis Parents. Charles & Kathleen
Eirschele \ Craven Countv Board of Education
Gene Edward Llovd \ Department of Public Instruction
Mrs Ph\llis ^' Moore \ Cumberland Countv Schools
Lanev Bruce Harrill \ State Board of Education
Joseph J Sarreno \ Department of Public Instruction
CASE
DATE OF
MMBER
\IJ
DECISION
98 CSE 0949
Smith
09/08/98
98CSE0975
Chess
09/01/98
98 CSE 1036
Morrison
09/15/98
96 DCS 2105
Gra\
07/08/98
97 DCS 0251
Phipps
08/31/98
97 DCS 1219
Smith
07/29/98
97 DCS I486
Morrison
06/22/98
97 DCS 1574
Gra>
08/04/98
98 DCS 0468
Morrison
06/09/98
98 DCS 0675
Rcilly
07/15/98
98DHR02I9
ReilK
08/11/98
98 DHR 0637
Phipps
07/02/98
97 DOJ 1368
Phipps
09/10/98
98 DOJ 0871
Momson
07/09/98
97 DOJ 1 236
Phipps
07/24/98
97 DOJ 1319
Phipps
07/29/98
97 DOJ 1 578**
Gra\
08/20/98
97 DOJ 1 698
ReilK
06/12/98
98 DOJ 0022
Smith
07/14/98
98 DOJ 0121
Smith
06/22/98
98 DOJ 0147
Smith
07/16/98
98 DOJ 0388
Reilh
07/24/98
98 DOJ 0430
( rra>
07/21/98
98 DOJ 043 1
Gra\
08/21/98
98 DOJ 0432
Becton
06/08/98
98 DOJ 0526
Momson
09/09/98
98 DOJ 0574
Chess
07/30/98
98 DOJ 0600
Momson
08/07/98
98 DOJ 0841
Phipps
09/16/98
98 DOJ 0847*'
Gra\
08/20/98
98 DOJ 0878
Phipps
09,'08/98
98 DOJ 0879
Owens
08/31/98
98 DOJ 0930
Phipps
09/22/98
98 DOJ 0848
Smith
08/04/98
98 DOJ 0937
.Nlom^on
09/17/98
98 DOJ 0938
Momson
08/18.''98
98 DOJ 0939
Momson
08/18/98
98 DOJ 1081
Momson
09/17/98
98 DOJ 1141
Momson
09/29/98
98 DOJ 1 1 45
Momson
09/22/98
98 BME 0870
Owens
07/30/98
97EDC 1233
Phipps
08/11 '98
97EDC 1234
Phipps
07/16/98
98EDC0110
ReilK
09/10/98
98 EDC 0305
Gra>
08/05/98
98 EDC 0350
Smith
09/17/98
98 EDC 0459
Owens
08/10/98
PI BLISHED DECISION
REGISTER CITATION
'
STATE PERSONNEI
Department of Correction
Tern T Rees \ Depanment of Conection
Mohammad H Baloch. M D \ Department of Correction
Leon Owens \ Depanment of Conection
Tern T Rees v. Department of Correction
Michael .A Smith v Depanment of Conection
97 0SPI67I*"
Smith
06/30/98
98OSP00I4
Gra\
09/01/98
98 OSP 0050
Becton
07/10/98
98OSP0ll9»"
Smith
06/30/98
98 OSP 0231*'
Reillv
08/11/98
<
750
NORTH CAROLINA REGISTER
October 15. 1998
13:8
CONTESTED CASE DECISIONS
AGENCY
Michael A Smith v Departmenl of Correction
Ja\ncD Bledsoe \ Correction. Di\ of Adult Probation & Parole
Carl \\ Cra\en. II \ Pender Correctional Institution
Dennis S Harrell \ Dept of Correction, Caledonia Correctional Institute
Tomm\ L Hancock v Departmenl of Correction
Bertha Darden \ Ra>mond Smith & Dept. of Correction. Central Prison
Crime Control and Public Safely
Roger D Da\is \ Crime Control & Public Safet\. St Hu> Patrol
.Albert R Little \ Crime Control & Public Safet>. Info S\s Specialists
Thomas E Carlton v Crime Control & Public Safet\. St Hu> Patrol
Employment Security- Commission
lane B Bolin and .\rlene G Sellers \ Emplovment Securm Commission
Jane B Bolin and .Arlene G Sellers \ Emplo\ment Security Commission
Environment and Satural Resources
Charles .\nthon\ Bruce \ ENR. Di\ ision of Parks and Recreation
Health and Human Services
.Annette Honea \ Department of Human Resources
.Angela M Miles v Cumberland Count) Department of Social SerMces
Shung Fung-Chin \ Department of Human Resources. Caswell Center
Charm Suick \ Cumberland Count\ Department of Social SerMces
Yolandra Best and Ro\ Hudson \ DHHS. John Umstead Hospital
^'olandra Best and Ro\ Hudson \ DHHS. John Umstead Hospital
Fred Foster. Jr \ Department of Health and Human Senices
Shung Fung-Chin \ Department of Human Resources. Casuell Center
Ruth Holrosd \ Montgomep. Ct\ DSS. Children's Services
Fred Foster. Jr \ Department of Health and Human Senices
James W Crews \ DHHS. Murdoch Center
Patricia R Quick \ DHHS. Dorothea Di\ Hospital
Angela M Miles \ Cumberland Counl\ Department of Social SerMces
Delores Laveme Rich \ Health & Human Services. Dorothea Di\ Hosp
Fred Foster. Jr \ Department of Health and Human Services
Da\ id .A Kilpatrick \ Health & Human SerA ices. Caswell Center
Fred Foster. Jr \ Department of Health and Human Ser\ ices
Anthons M Ruiz v Department of Health & Human Sscs. ^'outh S\cs
Rudolph Waters \ DHHS. "louth Senices. Dobbs School
Euwell Falconer \ Karen A An. rews. Gaston-Lincoln .Area Mental Health
JetTres L Williams \ Dorothe' Di\ Hospital
Barbara Jean Paquette \ Durham Counts (respondeat superior for the
Durham Couni\ Public Library )
Derrick Skinner \ Health & Human Sen ices. Cherr> Hospital
Departmenl of Justice
Linda Maraaret Koss \ State Bureau of Investi2ation
Department of Public Instruction
Lillie Bumette Pearsall v Wa\ne Ct\
Mr Ste\e Ta\lor
Bd of Ed . Mrs Veda McNair and
CASE
DATE OF
PI BLISHEDDEf ISION
\l MBER
ALJ
DEC LSION
REGISTER CITATION
98OSP0317*"
Reilb
08/11/98
98OSP0543
Owens
07/29/98
98OSP0633
Smith
06/25/98
98 OSP 0846
Mortison
09/08/98
98OSP08S1
Owens
08/04/98
98 OSP 0905
Smith
09/25/98
97 OSP OM 7
Chess
05/27/98
97 OSP 1 1 57
Mortison
07/22/98
98 OSP 0919
Phipps
09/24/98
97 OSP ii;2''
Chess
06/02/98
97 OSP 1134*'
Chess
06/02/98
98 OSP 0240
Reilb
06/08/98
96 OSP 0833
Chess
08/24/98
97 OSP 061 3*-
Gra\
07/10/98
97 OSP 0638*'"
Chess
08/13/98
97 OSP 0775
Gra>
07/10/98
97 OSP 0862*'
Chess
08/13/98
97 OSP 0863*"
Chess
08/13/98
97 OSP 1287*'-
Smith
08/20/98
97 OSP 1530*'"
Chess
08/13/98
97 OSP 1586
Smith
05/27/98
13 02 NCR 257
97 OSP 1701*'-
Smith
08/20/98
98 OSP 0060
Gray
07/20/98
98 OSP 0061
Becton
07/16/98
98 OSP 0084*'
Gra>
07/10/98
98 OSP 0120
Gray
07/08/98
98OSP0I87"-
Smith
08/20/98
98 OSP 0271
Owens
08/13/98
98 OSP 0403*'-
Smith
08/20/98
98 OSP 0454
Gray
06/04/98
98 OSP 0474
Morrison
07/30/98
98 OSP 0538
Reilh
08/06/98
98 OSP 0595
Becton
07/22/98
98 OSP 0765
Morrison
08/05/98
98 OSP 1 035
Gray
09/21/98
97 OSP 01 89
Chess
08/14/98
98 OSP 0944
Smith
08/25/98
Secretary of State
Jonathan M Demers \ Department of Secretar\ of State
Department of Transportation
Johnn\ O Shi\ar\ Department of Transportation
Larry \V Da\is\ Department of Transportation
Shern Lynn Noles \ Department of Transportation-NCDMV
Clarice Goodwin .Arthur \ Department of Transportation. Ferties Di\ ision
I'niversity ofSorth Carolina
Douglas Love. Jr \ LNC Hospitals
Deborah J Fenner \ NC Central University
JovceM Smith V North Carolina Central University
Fdvvin Swam v Universitv of North Carolina at Chapel Hill
Leo Wattbrd. Roosevelt Parris. Claiborne Baker et al v University of
North Carolina at Chapel Hill
Johnnv Johnson. Jr v A & T St University Student Union-Grievance Bd
Jessie L Johnson v Bernard K Locklear UNC at Pembroke
97 OSP 1018
Becton
97 OSP 1366
ReilK
98 OSP 0241
Gra\
98 OSP 0269
Chess
98 OSP 0864
Phipps
97 OSP 0662
ReilK
97 OSP 0902
Chess
97 OSP 1297
Smith
97 OSP 1694
Mortison
98 OSP 0254
Chess
98 OSP 0299
Owens
98 OSP 0444
Grav
07/07/98
09/01/98
07/08/98
08/11/98
09/24/98
06/08/98
05/29/98
06/25/98
07/31/98
07/17/98
09/02/98
09/29/98
13 03 NCR 343
Consolidated Cases.
13:8
NORTH CAROLINA REGISTER
October 15, 1998
751
CO.XTESTED CASE DECISIOSS
Jonathan L Fann v North Carolina State Universit\' Ph\sical Plant
Greta M Haulhome \ Universit\ of NC at Pembroke
Robert W Bnnson v NC State Unjversit>'
STATE TREASIRER
Hugh A Wells v Consolidated Judicial Retirement System of NC;
Bd of Trustees Teachers and Slate Employees' Retirement System
98OSP0465
Becton
07/17/98
98OSP0S31
Chess
09/11/98
98OSP0887
Owens
08/10/98
98DST03I6
Morrison
06/05/98
1301 NCR
166
{
TRANSPORTATION
Das id Warren Dew et al
\ Motor Vehicles. Alexander Killens Comin
95 DOT 1144 Grav
06/04/98
IM\ ERSrr^ OF NORTH CAROLINA
Patricia D Hall \ Unnersity of North Carolina at Chapel Hill
Ladonna P James v UNC Hospitals
98UNC0397 ReilK
98 UNC 0591 Becton
08/20/98
07/20/98
752
NORTH CAROLINA REGISTER
October 15, 1998
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